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Rates Improve on Political Turmoil in Washington

Date: May 19, 2017

Mortgage interest rates improved on the week on political turmoil in Washington as a special prosecutor was assigned to investigate Russia’s impact on the election. Economic data was mixed. Economic data stronger than expected included the NAHB Housing Market Index, April Industrial Production and Capacity Utilization, weekly jobless claims, and the May Philadelphia Fed Business Index. The Philadelphia Fed Business Index substantially exceeded expectations, coming in at 38.8 on expectations of 19.6. Economic data weaker than expected included the May Empire State Manufacturing Index, April Housing Starts, and April Building Permits. The recent mixed data calls into question whether the Fed will increase the Fed Funds Rate at its June FOMC Meeting. Russia and Saudi Arabia cut oil production in an effort to boost oil prices. In China, Industrial Production was slightly weaker than expected and Retail Sales were slightly better than expected.

The Dow Jones Industrial Average is currently at 20,764, down over 100 points on the week. The crude oil spot price is currently at $50.34 per barrel, up over $2 per barrel on the week. The Dollar weakened versus the Yen and Euro on the week.

Next week look toward Tuesday’s New Home Sales, Wednesday’s PMI Composite Flash, FHFA House Price Index, Existing Home Sales, and FOMC Minutes, Thursday’s International Trade and Jobless Claims, and Friday’s Durable Goods Orders, second look at Q1 GDP, and Consumer Sentiment Index as potential market moving events.