Todays Rates: Purchase - 30 Year Fixed: 3.125%   APR: 3.221%     15 Year Fixed: 2.375%   APR: 2.494%      30 Year Fixed High Balance: 3.375%   APR: 3.424%      15 Year Fixed High Balance: 2.625%   APR: 2.709%          Refinance - 30 Year Fixed : 3.250%   APR: 3.317%     15 Year Fixed: 2.500%   APR: 2.584%      30 Year Fixed High Balance: 3.500%   APR: 3.529%      15 Year Fixed High Balance: 2.750%   APR: 2.871%

The Casil Report: A Financial Commentary on the Mortgage Markets by Lyons Vice President, Stephen Casil, March 15, 2016

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Good afternoon,
Today, Tuesday (03/15/16): The 10 Year Treasury Yield remained even at 1.96%, meaning generally similar mortgage rates as yesterday.
– February 2016 U.S. Retail Sales decreased by 0.1% (0.4% revised decline during the previous month); however, it met market expectations (0.1% decrease).  However, excluding gasoline and auto sales, retail sales actually rose 0.3% from the prior month.  The 0.3% rise in this portion of retail sales was due mostly to increases in consumer spending in restaurants and e-commerce retailers.  Overall though, this drop in retail sales might lead to a slowdown in U.S. economic growth, since approximately 70% of U.S. GDP consists of consumer spending. 
– February 2016 U.S. PPI (wholesale price levels) decreased by 0.2% (0.1% increase during the previous month), meeting market expectations (0.2% decrease). In addition, Core PPI (excluding volatile food and energy prices) remained unchanged from last month, coming in lower than market expectations (0.1% increase). This month’s drop in gasoline and food prices was the major factor for the decline in the PPI reading.  This continued muted PPI reading is showing that U.S. inflation might still be holding steady, which could possibly delay the next Fed (FOMC) interest rates hike. 
– The March 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 lower market expectations (Index Level of 59). This month’s continued weakness in the NAHB Housing Market Index, again primarily due to builder concerns regarding a lack of available lots and workers for new construction, could be a sign of future weakness in the U.S. housing market.
– The March 2016 Empire (New York) Manufacturing Report rose to an Index Reading of +0.6 (-16.6 Index Reading during the previous month), coming in much better than market expectations (-9.5 Index Reading). This month’s surprising strength in manufacturing activity, due to a pick-up in new manufacturing orders and shipments, could be a positive indicator for the New York region’s manufacturing portion of the economy. 
Here are the U.S. Market Data / Releases for the rest of week that could drive treasury yields / mortgage rates up or down:
Wednesday (03/16/16):  CPI (Consumer Inflation), Housing Starts / Building Permits, Industrial Production, FOMC (Fed) Meeting / Announcement
Thursday (03/1716): Weekly Jobless Claims, Philadelphia Fed Manufacturing Index, Leading Economic Indicators
Friday (03/18/16): Michigan Consumer Confidence Sentiment
Here is a recap of the major economic and political data / reports from the prior week (an increasing 10 Year Treasury Yield means generally higher mortgage rates and vice-versa):
Monday (03/14/16): The 10 Year Treasury Yield dropped to 1.96%.
– No major U.S. economic reports were released this day.
Friday (03/11/16): The 10 Year Treasury Yield rose to 1.98%.
– No major U.S. economic reports were released this day.
Thursday (03/10/16): The 10 Year Treasury Yield rose to 1.93%.
– U.S. Weekly Jobless Claims dropped to a five month low with a 259K reading this week (277K during the previous week), coming in lower than market expectations (275K).  In addition, the less volatile, four week moving address for jobless claims  also dropped to a five month low, to a to 268K level. This continued low level of jobless claims shows a continued decline in Americans filing for unemployment insurance, which is a very positive indicator for continuing recovery of the U.S. Labor Market. 
Wednesday (03/09/16): The 10 Year Treasury Yield rose to 1.89%.
– January 2016 U.S. Wholesale Inventories increased by 0.3% (no change during the previous month), coming in better than market expectations (0.2% decrease).  This month’s rise in wholesale inventories shows that U.S. wholesalers are keeping higher inventory levels due to possible increased confidence that they will sell all of their products, which could be a positive sign for future U.S. economic growth. 
Tuesday (03/08/16): The 10 Year Treasury Yield dropped to 1.83%.  
– No major U.S. economic reports were released this day.
Monday (03/07/16): The 10 Year Treasury Yield rose to 1.90%.  
– The January 2016 U.S. Consumer Credit Report (levels of consumer debts) came in at $10.5 Billion ($6.4 Billion during the previous month), coming in lower than market expectations ($16.5 Billion). This drop in consumer credit, due to a decline in credit card use (revolving debt), along with muted growth in automobile loans and student loans (non-revolving debt), could be a negative U.S. consumer spending signal.
Friday (03/04/16): The 10 Year Treasury Yield rose to 1.88%.
– The February 2016 U.S. Employment (Jobs) Report was released this day.
-> The Unemployment Rate remained at an eight year low with a 4.9% Unemployment Rate, meeting market expectations (4.9% Unemployment Rate).  The Unemployment Rate remained under 5% even with more workers re-entering the official workforce, which is reflected in the officially counted Labor Participation Rate (rose to 62.9% – a slight pickup from its lowest level since 1978). 
-> In addition, the Non-Farm Payrolls Report increased by 242K (increased by a 172K the prior month), coming in much better than market expectations (190K increase). This means that 242K new jobs were created in February.
-> Average hourly earnings / wages actually dropped 0.1% from the previous month (0.5% increase during the month before), coming in lower than market expectations (0.2% increase).  This means that U.S. wage growth actually declined this month, which could signal stabilizing wage inflation, or it could be a one month aberration.
->Therefore, this month’s U.S. Employment Report showed that the U.S. job growth remained steady, with a substantial pickup in new jobs created.  However, average hourly earnings / wage growth actually declined this month. Overall, this month’s better than jobs report, besides the drop in the hourly earnings number, could speed up the Fed’s (FOMC) timeline to raise interest rates this year.
Thank you,

Stephen Casil
Vice President
Secondary Marketing Manager
scasil@elyons.comLyons Mortgage Services, Inc.
48-02 25th Avenue, Suite 303
Astoria, New York 11103

Tel 800 448 8101
Fax 718 956 6350
NMLS ID 58702


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