Mortgage bond prices finished the week slightly lower which put a little upward pressure on rates. Selling pressure pushed rates higher through most of the week but the Fed buffered some of the losses with their MBS purchases. The data was mixed. Industrial production rose 0.4% vs the expected 1.3% increase. Capacity use was 71.4% vs 72%. Retail sales rose 0.6% vs the expected 1% increase. The NAHB Housing index was 83 vs 78. Housing starts were 1416K vs the expected 1489K. Jobless claims were 860K vs 830K. The Philadelphia Fed business conditions index was solid report with a reading of 15.0 vs the expected 13.0 mark. Consumer sentiment was 78.9 vs 77 and LEI rose 1.2% vs 1.4%. Mortgage interest rates finished the week worse by approximately 1/8 to 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Existing Home Sale | Tuesday, Sept. 22, 10:00 am, et | 5.95M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
| 2-year Treasury Note Auction | Tuesday, Sept. 22, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| FHFA House Price Index | Wednesday, Sept. 23, 10:00 am, et | Up 1.4% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| 5-year Treasury Note Auction | Wednesday, Sept. 23, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Weekly Jobless Claims | Thursday, Sept. 24, 8:30 am, et | 885K | Important. An indication of employment. Higher claims may result in lower rates. |
| New Home Sales | Thursday, Sept. 24, 10:00 am, et | 875K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| 7-year Treasury Note Auction | Thursday, Sept. 24, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Durable Goods Orders | Friday, Sept. 25, 8:30 am, et | Up 1.5% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
FED STATEMENT
“The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation.
The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”
Fed Chair Powell said, “Effectively, we’re saying rates will remain highly accommodative until the economy is far along in its recovery.” The latest survey of Fed members anticipates no Fed rate adjustments until 2023.