By Louis S. Barnes                                          Friday, August 15, 2014

Mortgage interest rates improved slightly this past week as economic data was mostly weaker than expected. Economic data weaker than expected included July Retail Sales, weekly jobless claims, the August New York Empire State Manufacturing Index, and the University of Michigan Consumer Sentiment Index. Retail Sales had their worst reading in six months and the Consumer Sentiment Index fell to its lowest level since last November. Inflation data was tame with the July Producer Price Index up just 1.7% year over year and up 1.6% year over year excluding the food and energy components. Also supporting lower rates is economic data out of Europe. Germany’s economy contracted 0.2% in the most recent quarter. Italy is in recession and France’s economy is flat. This week’s data call into question whether the Federal Reserve will be able to increase short term interest rates anytime soon. The Treasury auctioned $67 billion of 3 Year Notes, 10 Year Notes, and 30 Year Bonds which were met with mixed demand. Geopolitical tensions continue between ISIS and Iraq, Ukraine and Russia, and Israel and Hamas.

The Dow Jones Industrial Average is currently at 16,589, up over 30 points on the week. The crude oil spot price is currently $96.63 per barrel, down almost $1 per barrel on the week. The Dollar strengthened versus the Yen and Euro on the week.

Next week look toward Monday’s Housing Market Index, Tuesday’s Consumer Price Index (CPI) and Housing Starts, Wednesday’s FOMC Minutes, and Thursday’s Jobless Claims, Philadelphia Fed Survey, and Existing Home Sales as potential market moving events.