Mortgage bond prices finished the week a tick or two lower which only put mild upward pressure on rates. The foreign demand for US Treasuries at the auctions this week was below average. However, stocks experienced some very large swings tied to uncertainties surrounding US and China trade negotiations. The data was mixed. Weekly jobless claims were higher than expected which is generally good for lower rates. Producer prices rose 0.2% as expected. The core rose 0.1% versus an expected 0.2% increase. The trade deficit was near expectations at $50B. Consumer prices rose 0.3% versus the expected 0.4% increase. The core rose 0.1% while analysts looked for a reading of 0.2%. Mortgage interest rates finished the week unchanged to worse by approximately 1/8 of a discount point.


Economic IndicatorRelease Date & TimeConsensus EstimateAnalysis
Retail SalesTuesday, May 14,
8:30 am, et
Up 1.4%Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Industrial ProductionWednesday, May 15,
9:15 am, et
Up 0.4%Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity UtilizationWednesday, May 15,
9:15 am, et
78.6%Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
Business InventoriesWednesday, May 15,
10:00 am, et
Up 0.6%Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
Weekly Jobless ClaimsThursday, May 16,
8:30 am, et
225KImportant. An indication of employment. Higher claims may result in lower rates.
Philadelphia Fed SurveyThursday, May 16,
10:00 am, et
9Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Leading Economic IndicatorsFriday, May 17,
10:00 am, et
Up 0.4%Important. An indication of future economic activity. A smaller increase may lead to lower rates.
U of Michigan Consumer SentimentFriday, May 17,
10:00 am, et
97.4Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

World Rates

Interest rates of the main countries around the world are set by their central banks. These bankers tend to raise rates when growth is expanding strongly and cut rates when their economies need stimulating. Currently the United States has the highest rate of any of its economic allies. The US rate sits at 2.5% while Australia is at 1.5%, the ECB is at 0%, Japan is at -0.1%, and the Bank of England is at 0.75%. Many of these central banks haven’t made any changes since 2016. For example, the ECB put rates to 0% in 2016 and haven’t moved since as they see global economic growth as a continued concern. The US Federal Reserve last raised rates December 2018 but even they paused the hikes this year and haven’t moved since. The Fed is clear that they are data dependent. That is why the economic reports each week often result in market swings. Fortunately, the trading pattern of late has been very tight and we have avoided huge market swings. Be cautious here as rates remain historically very favorable. Now is a great time to take advantage of these levels.