After booming for more than a year, the manufacturing sector of the economy is starting to show signs of cooling off from its red-hot growth pace. Industrial production fell 0.2% in September - marking its biggest decline since June 2009.
Capacity Utilization, a measure of how much of a factory's total production quotient is in use, decreased to 74.7% last month from 74.8% in August. By comparison, the gauge averaged 80% over the past 20-years. It is abundantly clear to mortgage investors that capacity utilization remains well below levels where inflation inducting production bottlenecks might be expected to occur.
News of soft production growth together with a benign inflation measure from the manufacturing sector are supporting steady to slightly lower mortgage interest rates today.
There are a number of reasons to believe the Dow and the Nasdaq will likely put in a cycle high this week - probably on Wednesday or Thursday. If the assessment proves accurate, the migration of capital leaving riskier assets like stocks for the safety of the Treasury and mortgage-backed security markets should also prove supportive of the prospects for steady to perhaps fractionally lower mortgage interest rates this week.
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