Updated on July 15, 2020 10:10:19 AM EDT
The first of today’s two economic reports was Junes Industrial Production data at 9:15 AM ET that showed output at U.S. factories, mines and utilities jumped 5.4% last month. This was stronger than the 4.5% increase that was expected, but not enough of a variance to cause alarm in the bond market. It shows that some manufacturing activity was strong than thought, making the data bad news for rates. Fortunately, this is only a moderately important release that did not have an actual impact on today’s mortgage pricing.
The second release of the day will be the Federal Reserve’s Beige Book report at 2:00 PM ET. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by Fed region throughout the U.S. If there are any significant changes in conditions since the last update, we could see an afternoon move in the markets and mortgage rates. Signs of lackluster growth would be favorable news for rates.
Tomorrow morning brings us two important pieces of economic data for the markets to digest. The first is Junes Retail Sales report from the Commerce Department at 8:30 AM ET. It is expected to show that retail-level sales rose 5.0% last month as the economy continues to recover from the pandemic. Because consumer spending makes up over two-thirds of the U.S. economy and bonds are more attractive during weaker economic conditions, this data is watched very closely. Good news for mortgage rates would be a smaller than expected rise in sales.
We will also get weekly unemployment figures early tomorrow morning. They are expected to show that 1.26 million new claims for unemployment benefits were filed last week, down from the previous week. A high number of new filings is considered to be a sign of employment sector weakness. Therefore, the higher the number of claims, the better the news it is for mortgage rates.
©Mortgage Commentary 2020