Mortgage Market Update from Mitch

Mortgage interest rates were flat on the week as most economic reports were in line with expectations. Of note, April Retail Sales increased 0.5%, and excluding automobile sales retail sales were up 0.6%. Both reports were in line with expectations. Weekly jobless claims fell by 44k, again in line with expectations. The April Consumer Price Index (CPI) increased by 0.4%, and excluding the food and energy components core CPI was up 0.2%. Year over year, CPI is up 3.2% and core CPI is up 1.3%. The April Producer Price Index (PPI), a measure of wholesale prices, was up 0.8%, slightly more than expected. Core PPI was also up slightly more than expected, up 0.3%. The University of Michigan Consumer Sentiment Index was reported at 72.4, stronger than the 69.5 expected. The US Treasury auctioned $75 billion in 3 Year Notes, 10 Year Notes, and 30 Year Bonds, which were met with mixed demand.

Financial markets have been on hold this week, the freeze a perfect reflection of widespread uncertainty about the US and global economies. Long-term Treasury and mortgage rates have held their dramatic, near half-percent drops of the last month, but the declines themselves tend to prevent any further downward movement. A deeper slide will require something new: weaker data here, or Europe finally cracking (see Morgan Kelly, Irish Times), or a China slowdown. The small-business survey at www.nfib.com weakened slightly in April, but broadly, seven of ten components falling; and confirmed the dive in the March survey. New claims for unemployment insurance improved from last week’s odd surge, but the four-week moving average is the worst since last November. April retail sales picked up a thin .5%, but .3% of the gain was the price of gasoline alone. Housing is the obvious catalyst for a weaker economy, all of the various measures of prices showing a half-year, sustained decline, near 1% per month. However, it is no longer polite to speak of housing.

 
Mitch Friedman
Premiere Mortgage
Branch Manager
303.650.7427 direct
303.650.2671 fax
mfriedman@pmglending.com
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