Interest Rate - Market Comment for week of January 14, 2008
Market Comment - Week of January 14, 2008 Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was within a relatively narrow range. There were very few data releases. Stocks dominated the financial markets as news of continued economic uncertainty tied to the credit crunch dominated the headlines. There remained concerns that the economy is heading into a recession.
For the week, interest rates on government and conventional loans fell by about 1/8 of a discount point.
Consumer price index data Wednesday will be the most important event this week. With an abundance of additional important data releases scheduled the potential for market volatility is high.
Economic Factors |
Economic Indicator | Release Date Time | Consensus Estimate | Analysis |
Retail Sales | Tuesday, Jan. 15, 2008 | Up 0.1% | Important. A measure of consumer demand. Weakness may lead to lower mortgage rates. |
Producer Price Index | Tuesday, Jan. 15, 2008 | Up 0.2%, Core up 0.1% | Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates. |
Consumer Price Index | Wednesday, Jan. 16, 2008 | Up 0.2%, Core up 0.2% | Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates. |
Industrial Production | Wednesday, Jan. 16, 2008 | Down 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
Capacity Utilization | Wednesday, Jan. 16, 2008 | 81.3% | Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates. |
Fed "Beige Book" | Wednesday, Jan. 16, 2008 | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
Housing Starts | Thursday, Jan. 17, 2008 | Down 0.3% | Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates. |
Leading Economic Indicators | Friday, Jan. 18, 2008 | Down 0.1% | Important. An indication of future economic activity. Weakness may lead to lower rates. |
Fundamental Week
The abundance of fundamental data this week provides a good opportunity for mortgages to improve. If the data shows weakness in the economy with little or no inflationary pressures then it is possible for mortgage bonds to rally resulting in mortgage interest rate decreases. However, if the data shows that the economy is rebounding or any significant signs of inflation, mortgage bonds may fall pushing mortgage interest rates higher.
Mortgage interest rates remain favorable. Now is a great time to avoid the uncertainty surrounding continued market volatility.