This week brings us the release of seven economic reports that may affect mortgage rates with several of them considered to be highly important. There is at least one release scheduled every day of the week except tomorrow. December's Consumer Price Index (CPI) will kick off this week’s calendar early Tuesday morning. This is one of the more important monthly reports for the bond market each month since it measures inflationary pressures at the consumer level of the economy. There are two readings in the release, the overall and the core data that excludes more volatile food and energy prices. The overall index is expected to rise 0.2% from November's reading while the core data is also forecasted to rise 0.2%. Weaker than expected readings would be favorable news since it would signal inflation is softer than thought at the consumer level and should lead to bond strength and lower mortgage rates Tuesday morning. Next up is December's Producer Price Index (PPI) early Wednesday morning. The PPI is the sister release to the CPI but measures inflation at the producer or manufacturing level of the economy. Analysts are also expecting to see a 0.2% rise in both the overall and core readings. A larger than expected increase in the core reading could mean higher mortgage rates since strengthening inflation is bad news for the bond market. It erodes the value of a bond's future fixed interest payments, making them less appealing to investors and also allows the Fed to be more aggressive with rate hikes. As a result, they are sold at a discount to offset the lower value, which drives their yields higher. Because mortgage rates tend to track bond yields, rising inflation usually translates into higher interest rates for borrowers. Also Wednesday will be the release of the Federal Reserve's Beige Book at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on this info during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. Of particular interest is information regarding inflation, unemployment or future hiring. If there is a reaction to the report, it will come during mid-afternoon trading Wednesday. Thursday’s sole release is the highly important Retail Sales report for December at 8:30 AM ET, which will give us a very important measurement of consumer spending. Related data is extremely relevant to the markets because consumer spending makes up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.3% increase in sales. Analysts are also calling for a 0.5% rise in sales if more volatile auto transactions are excluded. Stronger than expected sales would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate economic growth. Friday has the remaining three reports, starting with December’s Housing Starts that tells us how many new home groundbreakings took place during the month. While this data gives us a small indication of housing sector strength, it is not known to be highly influential on mortgage rates. Accordingly, it will take a large variance from forecasts for the report to have a direct impact on mortgage rates. Forecasts show an increase in new home sales. December's Industrial Production report is scheduled for 9:15 AM ET Friday. This data measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength or weakness. Current forecasts are calling for an increase in production of 0.1% from November's level. A decline in output would be considered good news for bonds and could help lower mortgage rates as it would point towards a manufacturing sector that was softer than many had thought. The final report of the week is January's preliminary reading to the University of Michigan's Index of Consumer Sentiment that measures consumer willingness to spend. It can usually have enough of an impact on the financial markets to slightly change mortgage rates. By theory, if consumers feel better about their own financial and employment situations, they are more apt to make a large purchase in the near future, fueling economic growth. Forecasts are calling for a reading of 98.9, which would be a decline from November's 99.3. The lower the reading, the better the news it is for bonds and mortgage rates. Overall, Tuesday or Thursday are best candidates for most important day of the week due to the significance of the CPI and Retail Sales reports. Tomorrow could be the calmest day for rates. Besides the economic data noted above, we also have the early stages of corporate earnings season and the signing of the first phase of the China trade agreement set to take place this week that carry the potential to come into play. Also worth noting was a strong bond rally Friday afternoon that caused some lenders to revise rates lower before the end of the day. If you did not see an intraday revision Friday, you should see it reflected in tomorrow’s early pricing.