This week brings us the release of four monthly economic reports that have the potential to influence mortgage pricing. Two of those releases are considered to be highly important to the financial and mortgage markets. In addition to the data, there are also two days of Fed congressional testimony and a couple of Treasury auctions that also are expected to affect rates mid-week. The week’s calendar starts Tuesday morning when Fed Chairman Powell delivers day one of the Fed's semi-annual testimony to Congress on the status of the economy. Market participants will watch his words very closely. The Fed is required to deliver this testimony twice a year, which is considered to be of extreme importance to the financial markets. We almost always see the markets move as a result of what is said during this testimony. Look for him to address our employment situation, inflation, stock gains along with the coronavirus and its impact on our economy. His testimony begins at 10:00 AM ET with a prepared statement which is then followed by Q & A with committee members, which will be repeated again Wednesday morning. His prepared words are expected to be released prior to his actual appearance, so we could see a reaction early Tuesday morning. I am expecting to see the markets fluctuate Tuesday, possibly affecting mortgage rates noticeably also. The first day of testimony usually causes the most volatility because the prepared statement made by the Chairperson on the second day often differs little from that of the first day. Next up will be the first of two important Treasury auctions set for this week. 10-year Treasury Notes will be sold Wednesday, followed by 30-year Bonds Thursday. Wednesday's auction is the more important of the two as it will give us an indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during early afternoon trading those days. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward afternoon revisions to mortgage rates. This week’s economic calendar begins early Thursday morning with the release of January's Consumer Price Index (CPI). This index measures inflationary pressures at the consumer level of the economy. Its results can have a significant impact on the financial markets, especially on long-term securities such as mortgage-related bonds. Therefore, all related data is watched very closely. Current inflation readings will influence the Fed's future decisions regarding key short-term rate increases or reductions. The report is expected to show a 0.2% increase in the overall index and a 0.2% rise in the more important core data that excludes volatile food and energy prices. If we see weaker than expected readings, bond prices should rise and mortgage rates will likely fall. January's Retail Sales report will start Friday’s three releases. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched quite closely. If Friday's report reveals weaker than expected retail-level sales, the bond market should thrive and mortgage rates will fall since it would be a sign that the economy is not growing as quickly as many had thought. However, a stronger reading than the 0.3% increase that is forecasted could lead to higher mortgage rates Friday morning. The second report of the day will be January's Industrial Production data mid-morning Friday. It helps us measure manufacturing sector strength by tracking output at U.S. factories, mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see a 0.3% decline in production levels from December to January. A larger decline in output would be good news for bonds and mortgage pricing. The final report of the week will be February's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index tracks consumer willingness to spend and usually has a moderate impact on the financial markets because consumer spending is such a large part of the U.S. economy. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to show a 99.3 reading, down from January's final reading of 99.8. That would indicate consumers were a little less optimistic about their own financial situations than last month, meaning they are less likely to make a large purchase in the near future that fuels economic growth. Ideally, we would prefer to see a large decline in this reading. Overall, Tuesday or Friday are the best candidates for most important day of the week and are most likely to yield the biggest move in rates. There is no single day that stands out as the calmest because we have something scheduled every day except tomorrow and even then, we may see some movement as the death count from the coronavirus has now surpassed that of SAARS from years ago. If concerns about the virus continue to escalate, it would be bond-friendly that could lead to slightly lower rates tomorrow. There is little doubt that we will see plenty of movement in the markets and mortgage pricing this week, so proceed carefully if still floating an interest rate and closing in the near future.