MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates in check. Most of the movement was positive the first portion of the week with a bit of a sell-off Wednesday afternoon into Thursday morning. The data gave mixed signals on the strength of the economy. Housing starts were 1.162M in February versus the expected 1.2M. The FHFA House Price Index increased a double than expected 0.6%. Consumer confidence was 124.1 which was off the predicted 132 mark. The trade deficit printed at $51.1B. Analysts looked for a reading of $57B. The European Central Bank President indicated the ECB would intervene if economic conditions worsened which resulted in some flight to safety buying of US debt instruments Wednesday morning. Mortgage interest rates finished the week with discount points near unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Retail Sales | Monday, April 1, 8:30 am, et | Up 0.8% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| ISM Index | Monday, April 1, 10:00 am, et | 54.4 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Construction Spending | Monday, April 1, 10:00 am, et | Up 1.8% | Low importance. An indication of economic strength. Significant weakness may lead to lower rates. |
| ADP Employment | Wednesday, April 3, 8:30 am, et | 184K | Important. An indication of employment. Weakness may bring lower rates. |
| Factory Orders | Wednesday, April 3, 10:00 am, et | Up 0.3% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, April 4, 8:30 am, et | 222K | Important. An indication of employment. Higher claims may result in lower rates. |
| Employment | Friday, April 5, 8:30 am, et | 3.9%, Payrolls +125K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| Consumer Credit | Friday, April 5, 3:00 pm, et | $19.5B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
ISM INDEX
The Institute for Supply Management (ISM), formerly the National Association of Purchasing Management (NAPM), releases the “Report on Business” on the first working day of each month. Part of this report is the “diffusion index,” which tracks the economy’s ups and downs well.
In conducting this survey, the ISM questions purchasing executives from over 250 industrial companies compiling data on production, orders, commodity prices, inventories, vendor performance, and employment. Each of the respondents is asked to rank the categories as “up” or “down.” Various weights are applied to the individual components to form the composite index. A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can cause market swings. Be cautious heading into the release.