Market Commentary

Updated on February 15, 2019 10:33:02 AM EST

January's Industrial Production data was released at 9:15 AM ET this morning, revealing a 0.6% decline in output at U.S. factories, mines and utilities. This was well below expectations of a 0.1% rise and indicates that parts of the manufacturing sector softened last month. That is good news for mortgage rates since it points towards weaker economic activity. However, this is only a moderately important report. Accordingly, we have seen just a slight reaction in mortgage pricing.

Today's second release was February's preliminary reading to the University of Michigan's Index of Consumer Sentiment at 10:00 AM. This release gave us the bad news of the morning. It showed a reading of 95.5 that was higher than forecasts and a good-sized increase from December's 91.2. The increase means surveyed consumers felt better about their own financial and employment situations than they did in December. That is taken as a negative for bonds and mortgage rates because a higher level of confidence usually translates into stronger consumer spending that fuels economic growth. Fortunately, this is only considered to be a moderately influential release, preventing a heavy impact on rates.

Next week gives us a couple of economic reports for the markets to digest in addition to the minutes from last month's FOMC meeting and a fairly large number of Fed speaking engagements. The markets will be closed Monday for the President's Day holiday. Look for details on the week's entire calendar in Sunday evening's weekly preview.

 ©Mortgage Commentary 2019

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