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22939 West Hacienda Drive | Grass Valley, CA 95949

Juli Matta

Juli@JuliMatta.com
Ph: (530) 268-3333 | Cell: (530) 320-0004 | Fax: (530) 268-9674

Your “SOURCE” for all home loan needs!

Ca BRE #01031943 | NMLS #355267

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22939 West Hacienda Drive | Grass Valley, CA 95949

Juli Matta

Juli@JuliMatta.com
Ph: (530) 268-3333 | Cell: (530) 320-0004 | Fax: (530) 268-9674

Your “SOURCE” for all home loan needs!

Ca BRE #01031943 | NMLS #355267

Tuesday, April 16, 2024
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Market Commentary

Updated on April 15, 2024 10:07:12 AM EDT

March’s Retail Sales report was posted at 8:30 AM ET this morning, revealing consumers spent more during the past two months than thought. March’s sales rose 0.7%, more than twice what analysts were expecting. A secondary reading that excludes more costly and volatile auto transactions also greatly exceeded forecasts (up 1.1% compared to the predicted 0.4%). Also worth noting is that both readings for February were revised higher than their previous announcement by 0.3%. These readings are clearly bad news for bonds and mortgage rates since they show consumers spent much more than expected, fueling economic growth. Stocks tend to be the investment of choice during stronger economic times, making bonds less appealing to investors. The end result is higher bond yields and an upward move in mortgage rates.

It appears that the weekend news regarding Iran retaliating against Israel is having a negative impact on this morning’s bond trading. Bonds were already well in negative ground before today’s economic report was posted. This likely is a result of hope or optimism that Israel will not respond to the attack with further military action. Allowing the tension to ease between the two countries drastically reduces the possibility of a regional war. This has erased the need for a flight to safety move to bonds and is contributing to this morning’s early stock gains. The situation is fluid and Israel’s war cabinet is still debating if and how they should respond. A military or other strong response from Israel would undoubtedly elevate tensions further, most likely causing bonds to rally and stocks to lose ground.

The remainder of the week has four more monthly economic reports scheduled for release, but none of them are as important to the markets as this morning’s report was. In addition to the data, there is also a Treasury auction midweek and the Fed Beige Book, along with quite a few Fed speaking engagements, corporate earnings news and other factors to watch this week.

Tomorrow has two of those reports scheduled. Both are considered to be moderately important, meaning their impact on rates should be fairly minimal. Marchs Housing Starts report will be the first, coming at 8:30 AM ET. This data tracks groundbreakings of new home construction and gives us a measurement of housing sector strength. The report is expected to show a decline in new starts last month, indicating a bit of weakness in the new home portion of the housing sector. Good news for rates would be a sizable decline, but this data doesnt draw a high level of interest. It will take a large variance from forecasts to have a noticeable impact on mortgage pricing.

Next up is Marchs Industrial Production data at 9:15 AM ET. It tracks output at U.S. factories, mines and utilities, translating into a sign of manufacturing sector strength. Analysts are predicting a 0.4% rise in production, hinting at strength in manufacturing. This data is considered to be only moderately important for the markets though. Weaker manufacturing activity is favorable news for mortgage rates.

We also have a slew of corporate earnings releases this week as the traditional reporting season kicks into high gear. There are several big-named banks and other companies announcing results and forward guidance this week. Generally speaking, bad news for stocks often leads to bond gains and lower mortgage rates. They are scheduled throughout the week, mostly before the markets open or after they close. This means we can see influence on bond trading multiple days.

 ©Mortgage Commentary 2024

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