Monday 11/17 … Weekly Update

By: Matthew Graham •

This week is full of economic data that historically moves the mortgage backed security market. So far this morning, mbs are basically unchanged from close on Friday and appear to have found a small trading range with very little action. We are still battling the very tough resistance overhead, which we spoke about last week.

Economic Data for this week

Monday

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  1. NY Empire State Index, economists expecting a -26.0, came in at -25.4.
  2. Industrial Production, this came in much better then expected at 1.3% versus expectations of a -.01% decline.

Tuesday

  1. Producer price index which measures inflation on the producer level. Economists expecting a -1.5% overall drop and when excluding food and energy they are expecting a .1% increase.

Wednesday

  1. Consumer price index which measures inflation on the consumer level. Economists expecting a -0.8% overall drop in prices and when excluding food and energy they are expecting a .2% increase.
  2. Housing Starts, economists expecting 780,000 after last months reading of 817,000.
  3. Federal Open Market Committee(FOMC) minutes are released which gives investors insights to what the fed is talking about during their meetings.

Thursday

  1. Jobless claims, economists expecting 510,000 after last months reading of 516,000
  2. Philadelphia Fed Index, which measures strength of manufacturing in the Philadelphia area, economists expecting a -30.0 after last months -37.5 reading.
  3. Leading Indicators, economists expecting a -0.6% after last months 0.3% increase.

As a general rule, weaker the expected economic data is a positive for mbs which leads to lower mortgage rates. Also, lower inflation numbers are a positive for mbs and lower interest rates. Since the release of the morning data, mbs have sold off a few ticks and are now trading at the lows of the day and a little lower then closing on Friday. The day is still young and plenty of time for a rebound especially in the light of the Dow being down over 100 points. We will keep you posted if we see a big move in either direction.