Market Commentary

Updated on June 14, 2019 10:17:34 AM EDT

Yesterday's 30-year bond auction drew a decent level of investor interest. We saw bonds improve a little after results were posted at 1:00 PM ET, but not enough to intraday revisions to mortgage rates. Most lenders likely waited for this morning's data to reflect that move.

The Commerce Department started this morning's batch of data with the release of May's Retail Sales report. It showed a 0.5% rise in the headline number when forecasts were calling for a 0.7% increase. That was the good news. Unfortunately, there were also a couple of points that weren't favorable. Today's release revealed a 0.5% increase in a secondary reading that excludes more volatile auto-related transactions when analysts were expecting a 0.4% increase. It also showed sizable upward revisions to both of those readings for April. The revisions were enough of a change to likely cause a stronger than previously thought GDP reading for the second quarter. Because stronger economic growth makes bonds less appealing to investors, the stronger economic figures are bad news for mortgage rates.

May's Industrial Production data was the morning's second release, coming at 9:15 AM ET. It revealed a 0.4% increase in output at U.S. factories, mines and utilities. Because forecasts were calling for only a 0.2% rise and points towards stronger manufacturing growth, this data is also bad news for bonds and mortgage rates.

The final release of the week was the University of Michigan's preliminary Index of Consumer Sentiment for June at 10:00 AM ET. It came in at 97.9, falling short of the 98.1 that was expected and down from May's final of 100.0. The variance from forecasts isn't much but the decline from last month's reading is good news for mortgage rates as it indicates that consumers were not as optimistic about their own financial situations and likely will avoid making large purchases in the near future. As we saw with this morning's sales report, because consumer spending makes up almost 70% of the U.S. economy, related data is very relevant to the markets.

Next week has only a few relevant economic reports scheduled for release but does have another FOMC meeting taking place. This meeting will also include revised economic projections along with the now-standard press conference with Chairman Powell. The reports that are scheduled are mostly housing sector reports that are not considered to be major. Monday has nothing set that is expected to affect rates. Look for details on all of next week's activities in Sunday evening's weekly preview.

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