MARKET COMMENT
Mortgage bond prices finished the week mixed with conventional prices near unchanged and government prices lower. There was volatility throughout the week, but the largest movements came near the end. Tensions between the U.S. and Iran dominated headlines early and oil prices fluctuated as a result. The trade deficit and factory orders data both came in near expectations. ADP employment rose 202K versus the expected 155K. The Treasury auctions were mixed. The 10-year auction showed weaker than average foreign demand while the 30-year auction showed stronger foreign demand. Weekly jobless claims were 214K versus the expected 225K. Unemployment was 3.5% as expected. Payrolls disappointed with a reading of 145K versus 160K. Average hourly earnings rose 0.1% versus the expected 0.3% increase. Mortgage interest rates finished the week unchanged to worse by 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Price Index | Tuesday, Jan 14, 8:30 am, et | Up 0.2%, Core up 0.2% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Producer Price Index | Wednesday, Jan. 15, 8:30 am, et | Up 0.1%, Core unchanged | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Retail Sales | Thursday, Jan. 16, 8:30 am, et | Up 0.5% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Philadelphia Fed Survey | Thursday, Jan. 16, 8:30 am, et | Up 1.4 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Jan. 16, 8:30 am, et | 212K | Important. An indication of employment. Higher claims may result in lower rates. |
| NAHB Housing Index | Thursday, Jan. 16, 10:00 am, et | 76.2 | Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Friday, Jan. 17, 8:30 am, et | 1370K | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Industrial Production | Friday, Jan. 17, 9:15 am, et | Up 0.8% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Friday, Jan. 17, 9:15 am, et | 77.2% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Jan. 17, 10:00 am, et | 99.4 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
BUSY WEEK
Economic data is the number one reason mortgage interest rates move daily. Data is compiled from numerous sources and comes in two flavors, economic growth and inflation. Some releases are more important than others and thus are more likely to cause wider swings in mortgage rates. Rates move in relation to the deviation from expectations. We have significant releases starting Tuesday. The potential for mortgage interest rate volatility is greater as a result. Any indication of strength in the data will likely result in higher mortgage interest rates.