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This week brings us the release of five economic reports that have the
potential to affect mortgage rates. There is nothing of importance on the
economic front scheduled for tomorrow, so look for stock trading to have
the biggest influence on bond trading and mortgage pricing. We do have
round two of earnings releases that can significantly impact the stock markets
and help direct funds into or away from mortgage-related bonds. Strong
earnings reports should fuel a stock rally that pressures bonds and leads
to higher mortgage rates. On the other hand, disappointing earnings news
should make bonds more attractive and lead to rate improvements,
particularly on days that we don’t get any economic data.
March's Consumer Price Index (CPI) is the first report of the week at
8:30 AM ET Tuesday. This index is one of the most important pieces of
data we see each month. It is similar to last week's PPI but measures
inflationary pressures at the consumer level of the economy. If inflation
is rapidly rising, bonds become less appealing to investors, leading to
bond selling and higher mortgage rates. There are two readings in the
index that traders watch- the overall and the core data that excludes
more volatile food and energy prices. Analysts are expecting to see a
0.1%decline in the overall readings and a 0.2% rise in the core reading.
The core data is the more important reading, which ideally will show a
decline in prices at the consumer level.
March's Housing Starts is the next report, also coming early Tuesday
morning. It gives us a measurement of housing sector strength and
mortgage credit demand by tracking starts of new home construction and
the number of permits issued for future starts. This data usually doesn't
cause much movement in mortgage pricing unless it varies greatly from
forecasts. It is expected to show a small increase in construction starts
of new homes. Good news for the bond market and mortgage rates would be a
decline in home starts, indicating housing sector weakness.
The third report of the day is March’s Industrial Production data that
will be posted at 9:15 AM ET. It tracks output at U.S. factories, mines
and utilities, translating into an indication of manufacturing sector
strength. Current forecasts are calling for an increase in production of
0.3%. This data is considered to be only moderately important to rates,
so it will take more than just a slight variance to influence bond
trading and mortgage pricing. Signs of manufacturing sector strength are
considered negative news for mortgage rates, so a decline in output would
be good news for the bond market and mortgage shoppers.
Wednesday’s only news is the Federal Reserve’s Fed Beige Book report at
2:00 PM ET. This report is named simply after the color of its cover but
details economic conditions throughout the U.S. by Fed region. Since the
Fed relies heavily on the contents of this report during their FOMC
meetings, its results can have a fairly big impact on the financial
markets and mortgage rates if it reveals any significant surprises.
Generally speaking, signs of strong economic growth or inflation rising
would be considered negative for bonds and mortgage rates. Slowing
economic conditions with little sign of inflationary pressures would be
considered favorable.
The final report of the week will be posted late Thursday morning when
the Conference Board releases their Leading Economic Indicators (LEI) for
March. This data attempts to measure economic activity over the next
three to six months. This is considered to be a moderately important
report, so we may see a slight movement in rates as a result of this
data. It is expected to show no change from February’s reading, meaning
it is predicting little growth in economic activity over the next several
months. A decline would be considered good news for the bond market and
could lead to slightly lower mortgage rates.
Overall, it will likely be a moderately active week for mortgage rates.
However, unlike many weeks, the most important news comes earlier in the
week. I am labeling Tuesday the most important data and Friday appears to
be the best candidate for the least active day, but tomorrow may also be
fairly quiet. The stock markets could also heavily influence bond trading
and mortgage pricing any day this week as we get more corporate earnings
releases. I don’t think this will be one of the more active weeks in
terms of mortgage rates movement, although we should see minor changes a
couple days.
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... Float if my closing was taking
place between 21 and 60 days... Float if my closing was taking place over
60 days from now...
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