Mortgage Market in Review from Monte Hill week of 1/15/2007
Mortgage Market in Review
Week of January 15, 2007 Volume 14, Issue 3
Market Comment
Mortgage bond prices fell pushing rates higher last week as the fear of inflation dominated trading. A surprise rate increase by the Bank of England, the Federal Reserve’s counterpart, left many traders cautious about the Fed’s next move heading into the inflation data this week.
For the week, interest rates on government and conventional loans rose by about 1/2 of a discount point.
The consumer price index Thursday will be the most important release this week. Producer price index, industrial production, capacity use, housing starts, leading economic indicators, and consumer sentiment data also will be important. The bond market is closed Monday in observance of the Martin Luther King Holiday. Rates may be volatile as trading resumes Tuesday.
Looking Ahead |
Economic Indicator | Release Date and Time | Consensus Estimate | Analysis |
Martin Luther King Holiday | Monday, Jan. 15 | | Market closed in honor of the Martin Luther King Holiday. Shortened trading week may lead to volatility. |
Producer Price Index | Wednesday, Jan. 17, 8:30 am, et | Up 0.6%, Core up 0.1% | Important. An indication of inflationary pressures at the producer level. Weakness may lead to lower rates. |
Industrial Production | Wednesday, Jan. 17, 9:15 am, et | Up 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
Capacity Utilization | Wednesday, Jan. 17, 9:15 am, et | 81.8% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
Fed “Beige Book” | Wednesday, Jan. 17, 2:00 pm, et | None | Important. Details current economic conditions across the US. Signs of weakness may lead to lower rates. |
Consumer Price Index | Thursday, Jan. 18, 8:30 am, et | Up 0.5%, Core up 0.2% | Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates. |
Housing Starts | Thursday, Jan. 18, 8:30 am, et | Down 0.8% | Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates. |
Leading Economic Indicators | Thursday, Jan. 18, 10:00 am, et | Up 0.2% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
Philadelphia Fed Survey | Thursday, Jan. 18, 12:00 pm, et | None | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
Michigan Consumer Sentiment | Friday, Jan. 19, 10:00 am, et | 92.0 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Fundamental Week
Mortgage bonds traded in negative territory last week as traders prepared for inflation data this week. Fear and emotion dominated trading. The abundance of fundamental data this week provides a good opportunity for mortgages to recover from the beating they took last week. If the data this shows price pressures, mortgage bonds will continue to fall pushing mortgage interest rates higher. However, if the data comes in weaker than expected then a portion of the recent losses may be recouped. Despite the recent negative movements, rates remain historically low. Now is a great time to capitalize on the current levels.
Courtesy of
John Adams Mortgage
Monte J. Hill
586-308-6420
MacombHomeLending.com
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