Consumer Sentiment Hits Five Year High
U.S. consumer sentiment rose to its highest level in more than five years in November as consumers felt more optimistic about employment prospects and the outlook for the overall economy, a survey released on Friday showed.
The Thomson Reuters/University of Michigan preliminary reading on the overall index on consumer sentiment came in at 84.9, up from 82.6 the month before.
“More consumers expected good rather than bad times financially in the economy in early November, not only for the year ahead but over the next five years as well,” survey director Richard Curtin said in a statement.
“This was the most positive outlook for the overall economy in more than five years,” he said.
What is the number one factor for housing demand? Is it a low interest rate? Is it location, location, location? Is it low home prices? No, the number one factor that drives housing is how a consumer feels about their current and future financial situation. So, it is great news for the housing market that Consumer Sentiment has hit a five year high.
What Happened to Rates Last Week:
Mortgage backed securities (MBS) gained +42 basis points from last Friday to the prior Friday which caused 30 year fixed mortgage rates to move slightly lower. We had our highest mortgage rates on Tuesday and our lowest rates on Friday.
It was a very volatile week with large pricing swings. MBS moved +119 basis points from our lowest levels to our highest levels. Much of that volatility had to do with the election and the bond markets trying to position themselves ahead of what appears to be the impending “fiscal cliff” that is coming. MBS also reacted sharply to comments made by the President of the European Central Bank that growth in Germany and in the EU would be much slower than originally anticipated.
On the U.S. front, we had a very light week for economic data but the reports that were released were positive in nature as we saw very strong ISM Servicing, Consumer Sentiment and Wholesale Inventories.
What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises:
|Date||ET||Economic Release||Actual||Market Expects||Prior|
|13-Nov||2:00 PM||Treasury Budget||–||-$113.0B||-$98.5B|
|14-Nov||7:00 AM||MBA Mortgage Index||–||NA||-5.00%|
|14-Nov||8:30 AM||Retail Sales||–||-0.20%||1.10%|
|14-Nov||8:30 AM||Retail Sales ex-auto||–||0.10%||1.10%|
|14-Nov||8:30 AM||Core PPI||–||0.10%||0.00%|
|14-Nov||10:00 AM||Business Inventories||–||0.60%||0.60%|
|14-Nov||2:00 PM||FOMC Minutes||–||–||–|
|15-Nov||8:30 AM||Initial Claims||–||388K||355K|
|15-Nov||8:30 AM||Continuing Claims||–||3120K||3127K|
|15-Nov||8:30 AM||Core CPI||–||0.10%||0.10%|
|15-Nov||8:30 AM||Empire Manufacturing||–||-8.5||-6.2|
|15-Nov||10:00 AM||Philadelphia Fed||–||0||5.7|
|15-Nov||11:00 AM||Crude Inventories||–||NA||1.766M|
|16-Nov||9:00 AM||Net Long-Term TIC Flows||–||NA||$90.0B|
|16-Nov||9:15 AM||Industrial Production||–||0.10%||0.40%|
|16-Nov||9:15 AM||Capacity Utilization||–||78.30%||78.30%|
I will be watching these reports closely for you and let you know if there are any big surprises:
It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.