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Friday, January 18, 2019

Market Commentary

Updated on January 18, 2019 10:36:02 AM EST

The first of this morning’s two economic releases was Decembers Industrial Production report at 9:15 AM ET. It showed a 0.3% rise in output at U.S. factories, mines and utilities, exceeding expectations of a 0.2% increase. The larger increase makes the data negative for bonds and mortgage rates, but it was only a minor variance in a moderately important report. Therefore, it has not had much of an impact on this morning’s bond trading or mortgage pricing.

Januarys preliminary reading to the University of Michigans Index of Consumer Sentiment was posted at 10:00 AM ET. This release gave us clearly good news by coming in much lower than expectations. Today’s release revealed a 90.7 reading when analysts were expecting to see 96.5. This was also a sizable decline from November’s 98.3. The lower reading indicates that surveyed consumers were much less optimistic about their own financial situations than last month. That is good news because weaker levels of confidence likely will lead to softer levels of consumer spending that fuels economic growth. Unfortunately, this report does not carry the significance of some of the other reports we regularly get. That is why we have not seen a stronger reaction to the news.

Next week doesn’t have too much scheduled that is expected to influence mortgage rates. The markets will be closed Monday for the Martin Luther King holiday and the most important report of what was scheduled is likely to fall victim to the government shutdown. The remaining data we will get is moderately important at best. Look for details on next week’s events in Sunday evening’s weekly preview.

 ©Mortgage Commentary 2019