Rates Improve on Fed Chair Yellen Comments

Mortgage interest rates improved this past week on comments from Fed Chair Yellen that rates may not need to increase much to reach a neutral bias.  She also indicated that reducing the Fed’s balance sheet is still unknown and that the Fed does not intend to use unwinding as a policy tool.  As a result, it does not appear that markets expect another Fed rate increase this year.  Economic data was mostly weaker than expected.  Of note, the NFIB Small Business Optimism Index, May JOLTS Job Openings, weekly jobless claims, the June Core Producer Price Index (PPI), June Retail Sales, the June Consumer Price Index (CPI), June Capacity Utilization, and the University of Michigan Consumer Sentiment Index were weaker than expected.  May Consumer Credit, May Wholesale Trade, the June Producer Price Index (PPI), and June Industrial Production were stronger than expected.  The Treasury auctioned $56 billion of 3 Year Notes, 10 Year Notes, and 30 Year Bonds which were met with just okay demand.

 

The Dow Jones Industrial Average is currently at 21,562, up about 150 points on the week.  The crude oil spot price is currently at $46.40 per barrel, up over $2 per barrel on the week.  The Dollar weakened versus the Euro and Yen on the week.

 

Next week look toward Monday’s Empire State Manufacturing Survey, Tuesday’s Import and Export Prices and Housing Market Index, Wednesday’s Housing Starts, and Thursday’s Jobless Claims, Philadelphia Fed Business Outlook Survey, and Leading Economic Indicators as potential market moving events.