Wednesday, August 15, 2018


Updated on August 14, 2018 10:24:56 AM EDT

The weeks’ calendar starts tomorrow with three pieces of data scheduled for release. The first will be Julys Retail Sales data at 8:30 AM ET. This highly important report comes from the Commerce Department and will give us a measurement of consumer spending. Consumer level spending figures are extremely relevant to the markets because it makes up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.1% increase in sales. Analysts are also calling for a 0.3% rise in sales if more volatile and costly auto transactions are excluded. Larger than expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate stronger economic growth.

Employee Productivity and Costs data for the second quarter will also be released early tomorrow morning. It will give us an indication of employee output per hour. High levels of productivity are believed to allow the economy to grow without fears of inflation. I dont see this being a big mover of mortgage rates, but it may influence them slightly during morning trading if the sales data is a dud. Analysts have predicted a 2.0% rise in productivity during the second quarter and a 0.5% increase in labor costs. A sizable increase in productivity and a smaller than expected rise in costs would be favorable news for bonds.

Julys Industrial Production report at 9:15 AM ET that measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.4% increase from Junes level. A decline would be considered good news for bonds and mortgage rates because it would indicate manufacturing sector weakness and broader economic growth would be more difficult if manufacturing activity is slipping.

 ©Mortgage Commentary 2018