Market Comment - Week of September 13th, 2010
September 14th, 2010 12:34 PM

Mortgage bond prices fell last week pushing interest rates considerably higher. The primary cause for the increases was stronger than expected data. Consumer confidence and weekly jobless claims beat estimates solidly and shocked the bond market lower. Overall the Treasury auctions and stronger stocks also pressured mortgage bond prices.

Rates rose by about 1/2 of a discount point for the week.

The retail sales data Tuesday will set the tone for trading this week. If any of the data comes in positive mortgage interest rates may continue the recent climb into higher territory. Expect more volatility, as stocks and bonds are likely to continue their back and forth trading pattern.

Economic Factors

Economic Indicator

Release Date Time

Consensus Estimate


Retail Sales

Tuesday, Sept. 14, 2010

Up 0.2%

Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.

Business Inventories

Tuesday, Sept. 14, 2010

Up 0.4%

Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.

Industrial Production

Wednesday, Sept. 15, 2010

Up 0.4%

Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.

Capacity Utilization

Wednesday, Sept. 15, 2010


Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.

Producer Price Index

Thursday, Sept. 16, 2010

Up 0.2%, Core up 0.2%

Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.

Weekly Jobless Claims

Thursday, Sept. 16, 2010


Important. An indication of employment. An increase in jobless claims may bring lower rates.

Philadelphia Fed Survey

Thursday, Sept. 16, 2010


Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Consumer Price Index

Friday, Sept. 17, 2010

Up 0.1%, Core up 0.1%

Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.

Business Inventories

The report on business inventories basically gives a broader look at the durable goods, factory orders, and retail sales reports. Not only is this report an important part of the investment component of the GDP, but it also provides additional evidence about the economy in the upcoming months. Changes in business inventories slow as the economy approaches a peak, and rise as the economy approaches the trough of a recession. Therefore the change in business inventories is a leading indicator of GDP. The data for this report, which are published by the Department of Commerce's Census Bureau, comes from a monthly survey of inventories, orders, and manufacturers' shipments, in addition to the merchant wholesalers and retail trade surveys.

Not a great amount of attention is typically paid to this report due to the fact that much of the data is already available and surprises are rare. However, in this environment every piece of data has the potential to cause some volatility.

Posted in:General
Posted by Philip Jernigan on September 14th, 2010 12:34 PMPost a Comment

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