Last week mortgage rates experienced quite a bit of volatility, as early in the week they were hurt by corporate earnings reports equities rising. Late in the week, mortgages got some relief from low Retail sale figures and weak data on PPI.

This week’s economic calendar starts off slowly with only the NY Fed Empire Manufacturing Survey and NAHB Housing Market Index. After that, the week kicks into gear with significant domestic data on Tuesday, Wednesday and Thursday. A couple of Fed Speakers are scheduled this week. Most notably, Bullard, a voting member, is speaking on Wednesday, just ahead of the FOMC Minutes. Dudley is speaking on Thursday.

Finally, there will also be some international data this week which may affect mortgages. Wednesday labour data comes out of the UK in the form of jobless claims, earnings and unemployment numbers. Thursday trade data will come out of Japan, and in Europe we will see July retail sales data out of the UK. Friday PPI data for Germany may grab some headlines since there is no data due in the U.S.

Economic Calendar for the week of 08/15/2016 to 08/19/2016:
Monday: NY Fed Empire Manufacturing Survey and NAHB Housing Market Index
Tuesday: Housing Starts, Building Permits, CPI, Real average Weekly Earnings, Industrial Production, Capacity Utilization, Manufacturing Production
Wednesday: MBA Mortgage Applications and FOMC Meeting Minutes from July 26-27 Meeting
Thursday: Initial Jobless Claims, Continuing Claims, Philadelphia Fed Business Outlook, Bloomberg Economic Expectations, Bloomberg Consumer Comfort Index, and Leading Index
Friday: No data

Yet another day that is the same as the last, that is same as the last, and the same as the last. A month now with no change in interest rates. Nothing has moved the bond and mortgage markets and it appears nothing will. This morning the NY Fed Empire State manufacturing index down to -4.21; much lower than expected, but no reaction; the NAHB housing market index in line with forecasts even with July revised lower, no reaction; sales up to 65 +2, traffic 44 frm 45.  
 
Tomorrow July CPI expected 0.0% with the core expected +0.2%. Last Friday July PPI was actually down 0.4%. July housing starts and permits; starts expected -0.75% at 1180K, permits +0.6% at 1160K units. July industrial production expected +0.3% after increasing 0.6% in June; July capacity utilization 75.5% frm June’s 75.4%. Factory use has slowed since Dec 2014 when it reached 79%. Not that it matte4r5s one bit,, but Dennis Lockhart, Atlanta Fed is scheduled to talk at 12:30 tomorrow with Q&A; other reporting Fed speeches I don’t pay much attention to them anymore. That said, markets suck up every syllable as if gospel, the media salivates over them.
 
The stock market continues to increase as the global economic outlook is expected to slow. Not sure when that will end but when it does the run to safety will match the rush out the door. It may end when companies run out of funds to buy back stocks and increase dividends. Oil looked vulnerable a week ago, since then the price has increased, the equity market just loves that but I suspect it is lemmings following the leaders. The VIX index of volatility is so low that should bother investors, but it hasn’t. Low volatility is evidence of complacency that usually happens before a market turn.  Not willing to use the term bubble but it is getting close; defining the term though is as hard as defining ‘moderate’, ‘near term’, or ‘medium term’ that the Fed uses to cover specifics.
 
The 10 in the middle of its range at 1.55% +4 bps, MBS prices lower on the day and lower than when prices were set this morning. Our technical models remain neutral and until the trading rage breaks loose on the 10 yr (1.50%/1.60%) there will be no change to that and holding rate locks doesn’t benefit LOs and only slightly lenders if they can capture the swings correctly.