Sunday, May 12th
This week brings us six monthly economic reports for the markets to digest, three of which are considered to be extremely important and potential market movers. Around all those reports are an abundance of Fed speeches that may come into play also. The week starts light with nothing scheduled tomorrow that we need to be concerned with, but things get active pretty quickly after that.
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Bonds
Market Closed
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Dow
Market Closed
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NASDAQ
Market Closed
Trailing 90 Days - National Average
High
Unknown
April's Producer Price Index (PPI) will start this week’s economic calendar, scheduled for release at 8:30 AM ET Tuesday. This highly important report measures inflation at the producer level of the economy. These results are watched closely because rising inflation makes long-term securities, such as mortgage-related bonds, less attractive to investors and causes the Fed to be reluctant to begin lowering key short-term interest rates. The overall reading is expected to have risen 0.3% while the more important core data that excludes volatile food and energy costs, is predicted to show a 0.2% increase. Favorable news for bonds and mortgage rates will be smaller increases.
High
Unknown
Wednesday has the remaining two highly influential reports, both coming at 8:30 AM ET. One is the Consumer Price Index (CPI) that tracks inflationary pressures at the consumer level of the economy instead of the producer level. As with the PPI, there are two readings that the markets usually look at. Forecasts are calling for a 0.3% increase in the overall reading and the core data. Good news for mortgage rates would be smaller monthly increases and a decline in the annual readings.
High
Unknown
Retail Sales data for April is the second Wednesday morning report. This extremely relevant report measures consumer spending, which makes up over two-thirds of the U.S. economy. Analysts are expecting a 0.4% increase in sales from March to April. A smaller increase should push bond prices higher and mortgage rates lower Wednesday morning, assuming the CPI doesn’t show a negative surprise. The CPI will likely draw a little more attention than this sales report, but both can cause a noticeable move in mortgage pricing.
Low
Unknown
Thursday morning has two moderately important monthly economic releases in addition to the weekly unemployment update. April's Housing Starts gives us an indication of housing sector strength and mortgage credit demand by tracking newly issued permits and actual starts of new home construction. It is expected to show a rise in new construction starts, hinting at strength in the new home portion of the housing sector. This report is not known to be a big mover of mortgage rates, so it likely will have a minimal impact on Thursday’s rates regardless of what it reveals.
Medium
Unknown
Also Thursday morning will be the release of April's Industrial Production report at 9:15 AM ET. It shows manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts show a 0.2% increase in production, indicating that manufacturing activity strengthened slightly last month. This report draws some attention but not nearly the same level that some of the week’s other reports do.
Medium
Unknown
Closing out this week’s calendar be will April's Leading Economic Indicators (LEI) at 10:00 AM ET Friday. This Conference Board report attempts to predict economic activity over the next three to six months. Analysts are expecting a 0.3% decline from March's reading, meaning that the indicators are predicting economic activity is likely to slow during the summer months. A larger decline would be considered good news for bonds and mortgage rates.
Medium
Unknown
In addition to this week’s data, we have quite a large number of Fed-member speaking appearances scheduled. There are multiple speeches being made most days and Fed Chairman Powell is involved in one late Tuesday morning. These speeches often are about mundane topics, but sometimes they involve discussions about the economy, inflation and how the Fed reacts to those matters. Any surprise comments, particularly about the Fed’s future plans with key interest rates, could cause a strong reaction in the financial and mortgage markets. With so many scheduled this week, don’t be surprised to see an intraday reaction in the bond market at least one day.
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Unknown
Overall, Wednesday is the most important day of the week for rates due to the significance of consumer inflation and spending data. They will likely heavily contribute to the direction of mortgage rates this week. The calmest day will likely be Friday unless something unexpected happens. If still floating an interest rate and closing in the near future, it would be prudent to keep an eye on the markets as we should see plenty of movement in them and mortgage rates this week.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.