![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week lower which put sharp upward pressure on rates. There were significant swings throughout the week as trading to start the year was volatile compared to the lulls seen at the end of last year. The data generally showed economic strength which factored into the higher rates. ISM Index was 47.4% vs 47.1%. ADP employment rose 164K vs 120K. Weekly jobless claims were 202K vs 216K. Unemployment was 3.7% vs 3.8%. Payrolls rose 216K vs 170K. Average hourly earnings rose 0.4% vs 0.3%. The labor market continued to show signs of resiliency even in the higher interest rate environment. Mortgage interest rates finished the week worse by approximately 1/2 to 5/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Credit | Monday, Jan. 8, 3:00 pm, et |
$10.35B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
| Trade Data | Tuesday, Jan. 9, 8:30 am, et |
$64.5B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| 3-year Treasury Note Auction | Tuesday, Jan. 9, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 10-year Treasury Note Auction | Wednesday, Jan. 10, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Thursday, Jan. 11, 8:30 am, et |
Up 0.2%, Core up 0.3% |
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Jan. 11, 8:30 am, et |
205K | Important. An indication of employment. Higher claims may result in lower rates. |
| Producer Price Index | Friday, Jan. 12, 8:30 am, et |
Up 0.2%, Core up 0.2% |
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates. |
Employment
The U.S. Bureau of Labor Statistics reported last Friday that “Total nonfarm payroll employment increased by 216,000 in December, and the unemployment rate was unchanged at 3.7 percent.” These figures were stronger than the expected 170,000 increase and 3.8 percent. Average hourly earnings rose 0.4% vs the expected 0.3%. “Employment continued to trend up in government, health care, social assistance, and construction, while transportation and warehousing lost jobs.”
The employment report is one of the most important economic releases each month. “This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry.”
The data is significant in pushing against the argument that the Fed should pivot and start cutting rates sooner rather later. Heading into the release most analysts predicated a March pivot. That timing is now less certain.
As we continue to warn, the Fed remains “data-dependent” regarding changes in rate policy. The possibility for future rate volatility remains high especially heading into economic releases. Be cautious in this environment.
