Straight Stats
Mortgage interest rates increased on the week as the European Central Bank, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, announced that it will provide liquidity in the form of dollar loans to European banks to help them remain solvent. This has reversed some of the fight to quality trades into Treasuries, driving rates up slightly. Economic news was generally weaker than expected. August Retail Sales, July Business Inventories, weekly jobless claims, the New York Empire State Manufacturing Index, and the Philadelphia Fed Business Index were all weaker than expected. August Industrial Production and the University of Michigan Consumer Sentiment Index were slightly better than expected. The August Producer Price Index, a measure of wholesale prices, was in line with expectations. The August Consumer Price Index was slightly higher than expected, up 0.4% on expectations that it would be up 0.2%.
Commentary
This week is stumbling to an end, markets largely unchanged and I think exhausted at the sight of non-functioning government here and over there. 10-year T-notes did rise from all-time-bottom 1.90% to 2.10%, but either value is an emergency trade, and the rise did little to mortgages, still 4.125-4.25% and which three weeks ago stopped following the 10-year down. The economy is conjugating the verb, “to stall.” Stalling, stalled, will stall… the NFIB small biz index fell for the sixth-straight month, now back to recession levels. Industrial production rose a mighty 0.2% in August, and regional surveys found a slower rate of slowing. August retail sales were flat, precisely zero change. In modest good news, layoffs have stalled, too, no real change in newly unemployed.
Gale Boonstra, CPA, MBA, is a Senior Mortgage Consultant at Premier Lending Group in Boulder. Feel free to contact her at 303.302.3932 or gboonstra@pmglending.com.
FOLLOW US