Today, Thursday (05/19/16): The 10 Year Treasury Yield dropped slightly to 1.85%, meaning generally lower mortgage rates than yesterday.
– U.S. Weekly Jobless Claims dropped to a 278K reading this week (294K during the previous week), meeting market expectations (278K). In addition, the less volatile, four week moving address for jobless claims rose this week, to a to 276K level. Even with this gradual pickup in jobless claims over the past few weeks, the continued overall low level of jobless claims shows a steady decline in Americans filing for unemployment insurance, which is a positive indicator for the U.S. Labor Market.
– The May 2016 Philadelphia Fed Manufacturing Index dropped to an Index Level of -1.8 (-1.6 Index Level during the previous month), coming in lower than market expectations (+2.5 Index Level). This report shows an overall slowdown in manufacturing production in the Philadelphia region, mostly due to declines in manufacturing employment, manufacturing shipments and new manufacturing orders.
Here are the U.S. Market Data / Releases for next week that could drive treasury yields / mortgage rates up or down:
Friday (05/20/16): Existing Home Sales
Monday (05/23/16): No Major U.S. Economic Releases
Tuesday (05/24/16): New Home Sales
Wednesday (05/25/16): FHFA Housing Price Index
Thursday (05/26/16): Weekly Jobless Claims, Durable Orders, Pending Home Sales
Friday (05/27/16): GDP (Gross Domestic Product), Michigan Consumer Confidence Sentiment
Here is a recap of the major economic reports from the prior week (a rising 10 Year Treasury Yield means generally higher mortgage rates):
Wednesday (05/18/16): The 10 Year Treasury Yield rose to 1.88%.
– The Fed (FOMC) Minutes report was released this afternoon, which is the minute by minute discussion during the last Fed Meeting by all the Federal Reserve policy makers. The Fed policy makers discussed that the U.S. economy and Labor Market are continuing to improve. Most of them are still considering a June rate hike if the U.S. economic reports continue to come out better than what the market expects. This Fed Minutes report was much more hawkish than the financial markets anticipated (the financial markets were pricing in almost no chance of a June Fed rate hike), so this change in Fed tone led to the sharp rise in treasury yields this day, with the market now pricing in a greater chance of a June rate hike now.
Tuesday (05/17/16): The 10 Year Treasury Yield rose to 1.76%.
– April 2016 U.S. CPI (consumer price levels) increased by 0.4% (0.1% increase during the previous month), coming in greater than market expectations (increase of 0.3%). In addition, Core CPI (excluding food and energy) rose by 0.2%, (0.1% increase during the previous month), meeting market expectations (increase of 0.2%). This bigger than expected rise in overall CPI was primarily due to a spike in gasoline prices. Overall, both yearly regular and Core CPI levels are starting to pick up, showing that consumer inflation might be starting to rise at a faster pace than before, which could then speed up the timeline of any future Fed rate hikes.
– April 2016 U.S. Industrial Production (output at factories, utilities and mines) increased by 0.7% (0.9% decrease during the previous month), coming in much greater than market expectations (0.2% increase). This month’s sharp rise in industrial production, mostly due to a rise in all three factors: manufacturing, utilities, and mining, primarily stemming from the recent drop in the U.S. dollar, could be an indicator of a possible pickup in U.S. economic growth.
– April 2016 U.S. Housing Starts (New Residential Construction) rose to a 1172K Annualized Rate (1099K Annualized Rate during the previous month), coming in greater than market expectations (1113K Annualized Rate). In addition, April 2016 U.S. Building Permits (Future Residential Construction) rose to an 1116K Annualized Rate (1077K Annualized Rate during the previous month); however, it came in slightly lower market expectations (1130K Annualized Rate). This rise in in housing starts and building permits indicates a future pickup in new home construction, which would be a positive indicator for the U.S. real estate market.
Monday (05/16/16): The 10 Year Treasury Yield rose to 1.75%.
– The May 2016 Empire (New York) Manufacturing Report dropped to an Index Reading of -9.0 (+9.6 Index Reading during the previous month), coming in much worse than market expectations (+6.2 Index Reading). This month’s sharp decline in manufacturing activity, due to a big decline in new manufacturing orders and manufacturing shipments, is a negative indicator for the New York region’s manufacturing portion of the economy.
– The April 2016 NAHB (National Association of Homebuilders) Housing Market Index remained even at an Index Level of 58 (Index Level of 58 during the previous month), coming in slightly lower market expectations (Index Level of 59). This month’s continued overall strength in the NAHB Housing Market Index, mostly due to the improving labor market and the continued low mortgage rate environment, could be a sign of future strength in the U.S. housing market.
Friday (05/13/16): The 10 Year Treasury Yield dropped to 1.71%.
– April 2016 U.S. Retail Sales increased by 1.3% (0.3% decrease during the previous month), coming in greater than market expectations (0.8% increase). In addition, excluding gasoline and auto sales, retail sales rose slightly by 0.6% from the prior month. This jump in retail sales, mostly due to higher auto and apparel sales, might lead to a pickup in U.S. economic growth, since approximately 70% of U.S. GDP consists of consumer spending.
– April 2016 U.S. PPI (wholesale price levels) increased by 0.2% (0.1% decrease during the previous month); however, it still came in lower market expectations (0.3% increase). In addition, Core PPI (excluding volatile food and energy prices) increased by 0.1%, meeting market expectations (0.1% increase). This month’s slight rise in wholesale energy and wholesale services was the major factor for this month’s marginal gain in the PPI reading. This continued muted PPI reading is showing that U.S. inflation might still be holding steady, even with higher gasoline prices, which would possibly increase the timeline of any future FOMC (Fed) rate hikes.
– March 2016 U.S. Business Inventories rose by 0.4% from the prior month, coming in greater than market expectations (0.2% increase). This means that businesses are keeping higher inventory levels as a result of expecting to sell all of their existing products, which could be a positive sign for U.S. economic growth.
– The May 2016 U.S. Michigan Consumer Confidence Sentiment rose to an Index Level of 95.8 (89.0 Index Level during the previous month), coming in better than market expectations (Index Level of 90.0). This month’s rise in consumer confidence, due to increases in both the current conditions and expectations portions of this report, could be another positive signal for future U.S consumer spending and economic growth.