Thursday, July 19, 2018


Updated on July 19, 2018 10:31:39 AM EDT

The Fed’s Beige Book report that was released yesterday afternoon showed modest or moderate economic growth in 10 of the Fed’s 12 districts but not major surprises. There were some concerns about the impact that trade tariffs are having on business conditions, although not all comments were negative for the economy. Some feedback indicated an increase in new orders, intended by their clients to get ahead before the tariffs took effect. Overall, nothing of significance was noted that we should be concerned or happy about. Accordingly, we saw almost no reaction in the bond market and mortgage rates after the report was posted.

We got two minor pieces of economic data this morning, starting with last week’s unemployment numbers at 8:30 AM ET. They showed that 207,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week’s revised 215,000 and lower than the 220,000 that analysts were expecting to see. It was also the fewest number of claims made since December 1969. The decline indicates a strengthening employment sector, making the data bad news for bonds and mortgage rates. However, it is worth noting that this is only a weekly snapshot, so we have seen little reaction to the news.

Junes Leading Economic Indicators (LEI) were posted at 10:00 AM ET, revealing a 0.5% rise. This means they are predicting economic growth over the next 3-6 months, making the data slightly negative for bonds and mortgage rates. Analysts were expecting to see a 0.4% increase, so the variance is inconsequential and a non-factor in this morning’s mortgage pricing.

Tomorrow has no relevant economic data scheduled for release. If we see a noticeable move in mortgage rates, it likely will be a result of sizable stock gains or losses. If the major stock indexes are calm tomorrow morning, mortgage rates should follow suit.

 ©Mortgage Commentary 2018