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Market Commentary

Updated on June 14, 2021 10:04:10 AM EDT

There is nothing of importance scheduled for today. The rest of the week has five relevant monthly economic reports in addition to a couple of other events scheduled that are likely to affect mortgage rates. The other events include a Treasury auction tomorrow and an afternoon of Fed events Wednesday.

The weeks activities start early tomorrow morning when the Commerce Department posts Mays Retail Sales data at 8:30 AM ET. This report gives us a very important measurement of consumer spending, which makes up over two-thirds of the U.S. economy. Analysts are expecting to see that retail sales fell 0.4%. The larger the decline from April, the better the news it is for bonds and mortgage rates. On the other hand, if we see stronger sales, we should expect bond weakness and an increase in rates tomorrow morning.

Also at 8:30 AM ET tomorrow will be the release of May’s Producer Price Index (PPI). It tracks inflationary pressures at the producer level of the economy. Last week’s release of the Consumer Price Index (CPI) showed much stronger than expected inflation at the consumer level. The CPI is more important than the PPI, but tomorrow’s release can also cause a fair amount of movement in inflation-sensitive bonds and possibly mortgage rates. Analysts are expecting to see a 0.5% rise in both the overall and more important core readings. Weaker numbers would be good news for rates.

The final economic release tomorrow will be Mays Industrial Production data at 9:15 AM ET. It will give us an indication of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. However, this report is considered to be only moderately important to mortgage rates. It is expected to show a 0.6% increase from Aprils production. A smaller rise, or a decline, would be favorable to bonds and mortgage pricing.

We also have a 20-year Treasury bond auction taking place tomorrow. Results will be posted at 1:00 PM ET, making this an early afternoon event. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates. However, if the interest in the sale was lackluster, we could see bonds weaken and mortgage rates move higher during afternoon trading.

Overall, the FOMC events make Wednesday the most important day of the week by default, but tomorrow should also be very active for the financial markets and mortgage pricing due to the economic data. The calmest day may be Friday. We should see the most movement in rates midweek. If still floating an interest rate and closing in the near future, it would be prudent to keep an eye on the markets, ready to lock, since we could see a big move one direction or the other this week.

 ©Mortgage Commentary 2021

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888.844.7077
NMLS ID: 37411 | http://www.nmlsconsumeraccess.org/ | Texas Consumer Complaint and Recovery Notice

Alaska, Arizona, California, Colorado, District of Colombia, Florida, Georgia, Hawaii, Idaho, Illinois, Maryland, Michigan,
New Jersey, New Mexico, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin

AK37411, AZ0940290, CA BRE-01863044, CA DBO-603G892, DC MLB37411, FL MLD1188, GA 67214, HI-37411,
ID MBL-7153, IL MB.6761146, MD 21315, MI FL0018183, NM 03711, OR ML-4837, PA 71250, TN 185154, UT 9896852,
VA MC-5623, WA CL37411, and WI 37411BA

 

Illinois Residential Mortgage License
James R. Thompson Center
IDFPR-Residential Mortgage Banking
100 W. Randolph, 9th Floor
Chicago, IL, 60601
Tel: 844-768-1713
Hawaii Branch
4894 Analii St.
Honolulu, HI 96821
M-F: 9AM – 5PM