Mortgage Market in Review from Monte Hill week of 7/16/2007
Mortgage Market in Review
Week of July 16, 2007 Volume 14, Issue 29
Market Comment
Mortgage bond prices rose last week applying downward pressure to mortgage interest rates. Bonds bounced back from recent weakness to post some improvements the first portion of the week. Unfortunately stock strength pressured bonds lower and rates higher the end of the week erasing some of the improvements from earlier in the week.
For the week, interest rates on government and conventional loans fell by about 1/8 of a discount point.
The consumer price index Wednesday will be the most important event this week. Producer price index, industrial production, capacity use, housing starts, leading economic indicators, and the Fed minutes will also be important.
Looking Ahead |
Economic Indicator | Release Date and Time | Consensus Estimate |
Analysis |
Producer Price Index | Tuesday, July 17, 8:30 am, et | Up 0.1%, Core up 0.2% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
Industrial Production | Tuesday, July 17, 9:15 am, et | Up 0.3% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
Capacity Utilization | Tuesday, July 17, 9:15 am, et | 81.5% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
Consumer Price Index | Wednesday, July 18, 8:30 am, et | Up 0.1%, Core up 0.2% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
Housing Starts | Wednesday, July 18, 8:30 am, et | Down 1.6% | Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates. |
Fed Monetary Report to Congress | Wednesday, July 18, 10:00 am, et | None | Important. Bernanke will deliver his semi-annual economic and monetary policy testimony to Congress. |
Leading Economic Indicators | Thursday, July 19, 10:00 am, et | Up 0.1% | Important. An indication of future economic activity. Weakness may lead to lower rates. |
Fed Minutes | Thursday, July 19, 2:00 pm, et | None | Important. Details of the last Fed meeting will be thoroughly analyzed. |
Fed Chairman
Testimony
The Fed Chairman delivers the Federal Reserve’s semiannual report on monetary policy, familiarly called the Humphrey-Hawkins report, to both the House and Senate Banking Committees in February and July. The report is one of the most important speeches given by the Fed Chairman. The remarks made to each committee tend to be identical in nature and address basic economic principles. The areas addressed tend to be the overall state of the US economy, recent developments, economic fundamentals, foreign developments, economic outlook, ranges for growth, and concluding remarks. Senator Hubert Humphrey and Representative Augustus Hawkins originally sponsored the legislation. The legislation officially expired in 2000; however, the Fed Chairman continues the practice.