MARKET COMMENT
Mortgage bond prices finished the week slightly higher which put downward pressure on rates. The Fed continued to dominate trading with additional billion-dollar MBS purchases daily. The rate changes we did see were within a very tight range which supported their goal of market stability. Construction spending fell 0.7% vs the expected 1.3% increase. Factory orders rose 6.2% vs the expected 5.2% increase. Economic releases on the employment front were mixed. ADP employment rose 167K vs 1.5M. Weekly jobless claims were 1.186M vs the expected 1.46M. Unemployment was 10.2%, expected 10.5%. Payrolls rose 1.763M vs the expected 1.6M increase. Mortgage interest rates finished the week better by approximately 1/8 to 1/4 of a discount point.

LOOKING AHEAD

Economic IndicatorRelease Date & TimeConsensus EstimateAnalysis
Producer Price IndexTuesday, Aug. 11,
8:30 am, et
Up 0.3%,
Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Consumer Price IndexWednesday, Aug. 12,
8:30 am, et
Up 0.3%,
Core up 0.1%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Weekly Jobless ClaimsThursday, Aug. 13,
8:30 am, et
1.1MImportant. An indication of employment. Higher claims may result in lower rates.
Preliminary Q2 ProductivityFriday, Aug. 14,
8:30 am, et
Down 0.4%Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Retail SalesFriday, Aug. 14,
8:30 am, et
Up 1.7%Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Industrial ProductionFriday, Aug. 14,
9:15 am, et
Up 3.1%Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity UtilizationFriday, Aug. 14,
9:15 am, et
69%Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Business InventoriesFriday, Aug. 14,
10:00 am, et
Down 1.2%Low importance. An indication of stored-up capacity. A significantly large increase may lead to lower rates.
U of Michigan Consumer SentimentFriday, Aug. 14,
10:00 am, et
79Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

PRODUCTIVITY
Productivity is the rate at which goods or services are produced. It is most commonly defined in terms of labor, which is the contribution of people to the process. Labor costs represent about two thirds of the value of the output produced. The Bureau of Labor Statistics of the US Department of Labor releases the most widely cited productivity statistics quarterly and annually. Increased productivity is often credited for economic growth with little signs of inflation. Productivity is significant in that as it increases, businesses can produce more with the same or less input. This wealth building effect is vital to the US economy. As productivity increases, the US economy generally performs better. As productivity decreases, the economy generally suffers.

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