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, October 16, 2015

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Good afternoon,
Today, Friday (10/16/15): The 10 Year Treasury Yield rose slightly to 2.03%, meaning generally higher mortgage rates than yesterday.
– September 2015 U.S. Industrial Production (output at factories, utilities and mines) decreased by 0.2% (0.1% decrease during the previous month), meeting market expectations (0.2% decrease). This month’s drop in industrial production, mostly due to a decline in manufacturing and mining, which offset a rise in utilities, could be an indicator of a possible slowdown in U.S. economic growth.
– The August 2015 JOLTS Job Openings Report showed that there were 5.37 Million job openings this month, which is an decrease from the 5.67 Million job openings the prior month.  This report shows that the number of available jobs declined this month, which could be a negative sign for the U.S. Labor Market.
– The October 2015 U.S. Michigan Consumer Confidence Sentiment rose to an Index Level of 92.1 (87.2 Index Level during the previous month), coming in greater than market expectations (Index Level of 88.4).  Even with month’s big rise in consumer confidence, due to increases in both the current conditions and expectations portions of this report, could be a positive signal for future U.S consumer spending and economic growth.
Here are the U.S. Market Data / Releases for next week that could drive treasury yields / mortgage rates up or down:
Monday (10/19/15): NAHB Housing Market Index
Tuesday (10/20/15): Building Permits / Housing Starts,
Wednesday (10/21/15): No Major U.S. Economic Releases
Thursday (10/22/15): Weekly Jobless Claims, FHFA Housing Price Index, Existing Home Sales, Leading Indicators
Friday (10/23/15): No Major U.S. Economic Releases
Here is a recap of the major economic and political data / reports from the prior week (a lower 10 Year Treasury Yield means generally lower mortgage rates and vice-versa):
Thursday (10/15/15): The 10 Year Treasury Yield rose to 2.02%.
– U.S. Weekly Jobless Claims dropped to a 255K reading this week (262K during the previous week), coming in lower than market expectations (269K).  In addition, the less volatile, four week moving address for jobless claims dropped to an almost fifty year low to 265K level. This continued low level of jobless claims shows a continued decline in Americans filing for unemployment insurance, which, once again, is a very positive indicator for continuing recovery of the U.S. Labor Market. 
– September 2015 U.S. CPI (consumer price levels) decreased by 0.2% (0.1% decrease during the previous month), meeting market expectations (decrease of 0.2%).  However, Core CPI (excluding food and energy) actually rose by 0.2%, (0.1% increase during the previous month), coming in greater than market expectations (increase of 0.1%). This drop in overall CPI was primarily due to lower gasoline prices holding back inflation price levels.  However, a continued rise in housing rents could be a sign of future consumer inflation.  Overall, both yearly regular and Core CPI levels still remain very low, showing that consumer inflation is still increasing only moderately.
– The October 2015 Empire (New York) Manufacturing Report rose to an Index Reading of -11.4 (-14.7 Index Reading during the previous month); however, it came in much worse than market expectations (-8.0 Index Reading). This month’s continued slowdown in manufacturing activity, due to a sharp slowdown in new manufacturing orders and shipments, is a negative indicator for the New York region’s manufacturing portion of the economy. 
– The October 2015 Philadelphia Fed Manufacturing Index rose to an Index Level of -4.5 (-6.0 Index Level during the previous month); however, it came in in lower than market expectations (-2.5 Index Level). This report shows an overall slowdown in manufacturing production in the Philadelphia region, mostly a drop in manufacturing employment and new manufacturing orders.
Wednesday (10/14/15): The 10 Year Treasury Yield dropped to 1.98%.
– September 2015 U.S. Retail Sales increased by 0.1% (no change during the previous month), coming in lower than market expectations (0.2% increase).  Excluding gasoline and auto sales, retail sales remained unchanged from the prior month.  This lower than expected rise in retail sales was due to declines in consumer spending in general merchandise stores and electronic stores.  Overall, this continued retraction in retail sales might lead to a slowdown in U.S. economic growth, since approximately 70% of U.S. GDP consists of consumer spending. 
– September 2015 U.S. PPI (wholesale price levels) decreased by 0.5% (no change during the previous month), coming in lower than market expectations (0.3% decrease). In addition, Core PPI (excluding volatile food and energy prices) decreased by 0.3%, also coming in lower than market expectations (0.1% increase). This month’s drop in gasoline prices and exports were the major factor for the decline in the PPI reading.  This continued muted PPI reading is showing that U.S. inflation is still holding steady, which could again possibly delay any Fed future interest rates hikes. 
– August 2015 U.S. Business Inventories remained unchanged from the prior month, coming in lower than market expectations (0.1% increase).  In this case, businesses are not keeping higher inventory levels as a result of not being able to recently sell all of their existing products (a decline in retail sales possible stemming from the overall drop in exports) which could be a negative sign for U.S. economic growth.
– The Fed (FOMC) Beige Book was released, summarizing the current economic situation in the United States for each Fed district over the past few weeks. The Fed stated that U.S. economic activity is increasing moderately in only three of the twelve Fed districts.  The rest of the Fed districts are showing only modest growth or even showing contracting growth.  In addition, inflation is also remaining primarily stable. Overall, U.S. economic activity in this Beige Book report is showing very gradual economic growth throughout the U.S., so this muted report could possible delay any Fed’s future interest rate increases.
Tuesday (10/13/15): The 10 Year Treasury Yield dropped to 2.06%.  
– The September 2015 U.S. Treasury Budget showed a U.S. government surplus of $91.0 Billion, coming in slightly lower than market expectations ($95.0 Billion U.S. government surplus).  The major reasons for this month’s continued government surplus were due continued additional tax revenue stemming from an improving U.S. economy.
Monday (10/12/15): The 10 Year Treasury Yield remained even at 2.10%.
– There were no U.S. Economic Releases today due to the Columbus Day Holiday.
Friday (10/09/15): The 10 Year Treasury Yield dropped to 2.10%.
– August 2015 U.S. Wholesale Inventories increased by 0.1% (0.3% decrease during the previous month), coming in slightly greater than market expectations (no change).  This month’s slight 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, could be a positive sign for future U.S. economic growth. 
Thank you,



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