Doylestown/Bucks County Branch's Blog - Philadelphia Mortgage Advisors

Plymouth Meeting, PA 19462

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Hurricane Effects

Early in the week, good news regarding North Korea impacted mortgage rates. The economic data caused little reaction. Mortgage rates ended the week higher, up from the best levels of the year.

In recent weeks, investors have reacted to news about North Korea in the expected fashion. Each time North Korea has conducted a missile test, investors have shifted to relatively safer assets, including mortgage-backed securities (MBS). The added demand has been positive for mortgage rates. As the North Korean government celebrated its 69th anniversary last weekend, many investors had expected another missile test. When this did not occur, investors took the reverse action on Monday. They added riskier assets to their portfolios, which was negative for MBS and mortgage rates. On Friday, however, investors broke from the recent trend and showed surprisingly little reaction to another missile launch.

Two big economic reports released on Friday fell well short of the expected levels. Retail sales in August fell 0.2% from July, below the consensus for a small increase. Auto sales dropped sharply from July, partly due Hurricane Harvey. Estimates of vehicles destroyed by the storm are around 300,000, though, which should boost auto sales in coming months.

Industrial production posted a much bigger miss with a decline of 0.9% from July, well below the consensus for a small increase. However, the Federal Reserve attributed nearly all of the drop to the effects of the hurricane, so there was little market impact.

It is difficult to know what effects the hurricanes will have on economic activity. Some areas will look weak now due to the storms, but the rebuilding efforts will boost activity in the future. As a result, investors likely will not react much to individual reports for some time. Instead, they will look at the results over a longer time frame to try to judge the underlying strength of the economy.

Looking ahead, the next Fed meeting will take place on Wednesday. Investors widely expect the Fed to announce that it will begin to reduce the quantity of Treasury and mortgage securities on its balance sheet. In addition, Housing Starts will be released on Tuesday and Existing Home Sales on Wednesday.

Mortgage News for the week ended September 8, 2017

Sep 8

4:23

Category | General

Mortgage Time

Mortgage Market News for the week ended September 08, 2017

Compliments of

Philadelphia Mortgage Advisors

Plymouth Meeting, PA 19462

Geopolitical Events

An increase in tensions with North Korea was positive for mortgage rates early in the week. Political headlines then caused some volatility later in the week, but the net impact was small. At Thursday's meeting, the European Central Bank (ECB) essentially postponed a discussion about tapering its bond buying program until its next meeting, so there was little reaction. The net effect was that mortgage rates reached the best levels of the year.

Geopolitical events were the primary influence on mortgage rates over the past week. On Sunday, North Korea conducted its most powerful missile test yet. Once again, the reaction from investors to the increase in tensions was to buy relatively safer assets such as U.S. mortgage-backed securities (MBS). The added demand for MBS caused mortgage rates to decline. Later in the week, mortgage rates rose and then fell based on shifting prospects for a plan to extend the debt ceiling. Increases in uncertainty about the debt ceiling have been good for mortgage rates. Conversely, when signs of progress on a plan have appeared, it has been negative for rates.

The effects of Hurricane Harvey were evident in the latest report on Jobless Claims which is released every Thursday. After holding very steady at levels near 240,000 for the last couple of months, claims jumped to 298,000 this week. This was the highest level since April 2015. It also was the largest weekly increase since 2012.

Looking ahead, the JOLTS report, which measures job openings and labor turnover rates, will be released on Tuesday. The Consumer Price Index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services which are purchased by consumers. Retail Sales will be released on Friday. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday. Headlines about the debt ceiling also could cause volatility in mortgage rates again.

Mortgage News for the week ended August 11, 2017

Aug 11

3:19

Category | General

Mortgage Time

Mortgage Market News for the week ended August 11, 2017

Compliments of

Philadelphia Mortgage Advisors

Plymouth Meeting, PA 19462

Low Inflation

Low inflation and rising tensions with North Korea were good for mortgage rates this week, while strong labor market data was negative. The net effect was that mortgage rates ended the week a little lower, near the best levels of the year.

Fed officials are hoping for inflation to rise, but the recent data has not cooperated. On Friday, the core consumer price index (CPI), a widely followed indicator, revealed that inflation in July was just 1.7% higher than a year ago, which was the same annual rate as last month. Just a few months ago, the annual rate was 2.2%.

The recent trend in inflation has been good for mortgage rates, and it could slow the pace of monetary tightening by the Fed. Earlier in the week, the Fed's Evans said that December is the earliest that the Fed should consider another federal funds rate hike and that if inflation remains weak they could put off another rate hike "until later."

Concerns about the threat posed by North Korea increased this week. Investors reacted by shifting from riskier assets such as stocks to relatively safer assets such as bonds. Mortgage-backed securities (MBS) were one beneficiary of this flight to safety. The added demand raised MBS prices, which was good for mortgage rates.

Tuesday's JOLTS report revealed job openings and labor turnover rates for June. While labor turnover rates were little changed, job openings unexpectedly surged to 6.2 million, which was a record high. A greater number of unfilled positions is viewed as a sign of strength for the labor market, so this data was good news for the economy. Stronger economic activity raises expectations for future inflation, however, so this report was negative for mortgage rates.

Looking ahead, Retail Sales will be released on Tuesday. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator. Housing Starts will come out on Wednesday. Industrial Production, an important indicator of economic activity, will be released on Thursday. In addition, the Minutes from the July 25 European Central Bank Meeting will come out on Thursday and could influence U.S. markets. News about North Korea could affect mortgage rates as well.

Mortgage News for the week ended July 28, 2017

Jul 28

2:28

Category | General

Mortgage Time

Mortgage Market News for the week ended July 28, 2017

Compliments of

Philadelphia Mortgage Advisors