Today banks are closed in observance of Columbus day. With the closure, we will not get rates listed and there will be no action in the mortgage backed security market.
This week brings us critical reports that in the past have always moved the mbs market but in todays environment who knows if traders will even care.
Wednesday's reports
- NY Empire State index, which gives a reading on the manufacturing segment of our economy. Economists are expecting a reading of -10.0 after last months -7.4 reading. Negative numbers show contraction, positive reading shows expansion.
- Retail sales, which economists are expecting to show a drop of -.4% from last months reading of -.3%. Continued weekness in retail sales is positve for the mbs market and lower rates.
- Retail Sales excluding autos, where economists are expecting a reading of a .1% increase in sales compared to last months reading of -.7%.
-PPI, or Producer Price index which measures inflation on the producer level. Since inflation is the mortal enemy to mortgage rates, this report is of significance. Economists are expecting a reading of -.3% showing inflation continues to ease after last months large drop of -.9%.
- Core PPI, which stips out food and energy from the report and is more closely watched then the overall PPI. Economists are expecting a .2% increase after a .2% increase from the prior month.
- Fed's Beige Book, which is a survey of economic conditions conducted by the 12 regional banks of the federal reserve. This report gives an insight as to how the Fed might act in its upcoming meeting.
Thursday's reports
- CPI, or Consumer price index which measures inflation on the consumer level. Economists are expecting a reading of .1% after last months drop of -.1%.
- Core CPI, which strips out food and energy and is the more closely watched of the 2 CPI reports as food and energy is so volatile. Economists are expecting a .2% reading after last months .2% reading.
- jobless claims, economists are expecting a reading of 475,000 after last weeks 478,000. Higher unemployment generally leads to lower mortgage rates.
- Industrial production, which is a measure of the strenght of our economic activity. Stonger economic growth typically leads to higher inflation which is a negative for mortgage rates. Economists are expecting a reading of -.8% after last months reading of -1.1%.
- Philly Fed index, which is a survey of manufacturers which shows the overall conditions of business activity. Economists are expecting a reading of -5.0 after last months 3.8% positive reading. Negative readings show business activity is contracting and postive reading show business activity expanding. Contracting business activity typically leads to lower prices thus lower inflation and lower mortgage rates.
Friday's reports
- Housing starts, economists are expecting a reading of 880,000 after last months 895,000.
- Consumer sentiment, which shows us how the consumer feels. Economists are expecting a 69.0 reading after last months 70.3 reading.
So, we do have an action packed week of economic reports that historically have moved mortgage rates. It will be interesting to see if traders pay any interest to these reports. As always, we will let you know how these reports came out, the results and how they are affecting mortgage backed securities and mortgage rates.
Last week was a very disappointing week from all angles. Stock market fell and the fixed income market which contains mortgage backed securities also fell. We saw interest rates on mortgages increase by almost 1%, that's right i said 1%. So, rates where in the low 5's but increased to the low 6's. Hopefully, the panic on wall street will subside and trading get back on track. This morning as i type the dow futures are up 360 points and most foreign markets showed postive activity with increases of 5 to 10% in trading.