WEEKLY JOBLESS CLAIMS DROP MORE THAN EXPECTED
RATES CURRENTLY TRENDING: NEUTRAL
Mortgage rates are moving sideways so far today. The MBS market worsened by -12 bps yesterday. This probably wasn’t enough to worsen mortgage rates or fees. The market experienced low volatility yesterday.
TODAY’S RATE FORECAST: NEUTRAL
Jobs: Initial Weekly Jobless Claims came in lower than market estimates (233K vs est of 243K). The more closely watched 4-week moving average fell from 246,000 down to 243,750 keeping a very low trend line intact.
Philly Fed: The July Business Conditions Outlook Survey came in at 19.5 vs est of 22.0. Still a solid level and has been at elevated levels ever since the election but this is a pull back from Junes very high level of 27.6.
Leading Economic Indicators: The June reading was higher than estimates (0.6% vs est of 0.4%) and an excellent pickup from May’s 0.2% pace.
Japan (number 3 economy): The Bank of Japan kept their key interest rate unchanged at -0.1%. They kept their inflation target the same but pushed back their ability to hit 2% CPI until 2019. They raised their growth out look (which is an improvement but still pretty anemic). 2017 GDP 1.8%, 2018 GDP 1.4%, 2019 GDP 0.7%.
European Central Bank: The ECB left their key interest rate unchanged at 0.0%. He said that risks to growth are broadly balanced and that inflation is not picking up yet and expects to remain near current levels for the next several months. As far as the bond program, he said that they are not discussing a “taper” and that they bond program will continue as planned until December. But they stand ready to decrease or increase their bond purchases as needed if the economy turns either way.