Mortgage bond prices finished the week near unchanged which kept rates within a narrow range. We started the week flat, saw some selling pressure mid-week, and the finished with slight positive movements. Inflation fears were flamed in response to the Fed minutes. “A number of participants suggested that if the economy continued to make rapid progress toward the committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.” The data was mixed. Housing starts were 1569K vs the expected 1750K. The NAHB housing index was 83.0 as expected. Weekly jobless claims were 444K vs 455K. The Philadelphia Fed index was 31.5 vs 45. Mortgage interest rates finished the week near unchanged to worse by approximately 1/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| FHFA House Price Index | Tuesday, May 25, 10:00 am, et | Up 1.1% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| New Home Sales | Tuesday, May 25, 10:00 am, et | 950K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, May 25, 10:00 am, et | 119 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Durable Goods Orders | Wednesday, May 26, 8:30 am, et | Up 0.7% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, May 27, 8:30 am, et | 455K | Important. An indication of employment. Higher claims may result in lower rates. |
| Q1 GDP | Thursday, May 27, 8:30 am, et | Up 6.1% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, May 28, 8:30 am, et | Down 4.4%, Up 0.6% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, May 28, 8:30 am, et | Up 0.7% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment | Friday, May 28, 10:00 am, et | 82.9 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Consumer Confidence
The Conference Board releases the Consumer Confidence Index on the last Tuesday of every month. The report details the levels of confidence individual households have in the performance of the economy. The data is derived from a survey of 5,000 households nationwide. The survey polls consumer opinions on current business conditions, their jobs, their incomes, and their future spending plans. The Conference Board is a non-profit group that has produced the data since 1967. The consumer confidence index is significant in that it provides a precursor into the willingness of consumers to spend in the months ahead. Consumers are vital to the US economy as consumer spending is a large portion of the gross domestic product. Manufacturers attempt to gauge consumer spending and adjust production accordingly.
