This week brings us the release of four pieces of monthly economic data that may influence mortgage rates in addition to a couple of Treasury auctions. Most of the scheduled data is considered to be pretty important to the markets and the more influential releases are set for the latter days. The week starts off light with nothing set for release tomorrow that is expected to affect rates, the only day without at least one event. The week's activities start Tuesday morning with revised 3rd Quarter Productivity numbers at 8:30 AM ET. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn't necessarily bad for bonds. It is the conditions around an expanding economy, such as rising inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate of productivity of 5.0%, matching the initial estimate. The stronger the reading, the better the news for the bond market. This report generally does not have a noticeable impact on mortgage pricing though, so it will take a wide variance to draw much attention. This week's two relevant Treasury auctions will take place Wednesday and Thursday. Wednesday's 10-year Note sale is the more important of the two and will likely have a bigger influence on mortgage rates. Results of both will be posted at 1:00 PM ET each day, making them afternoon events. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours those days. On the other hand, a weak interest in the auctions could lead to upward revisions to rates. Thursday starts the more important reports of the week with the release of November's Consumer Price Index (CPI) at 8:30 AM ET. It tracks inflationary pressures at the consumer level of the economy and is expected to show a 0.1% rise in the overall reading and a 0.2% increase in the more important core data. The core reading excludes more volatile food and energy costs, leaving us more stable information. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond's future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weaker than expected readings would be favorable for the bond market and mortgage shoppers. Friday has two reports set for release, starting with November's Producer Price Index (PPI) at 8:30 AM ET. This release is the sister index to the CPI, tracking inflationary pressures at the producer or manufacturing level of the economy. There are also two portions of the index that are used- the overall reading and the core data reading. If it reveals stronger than expected readings, indicating that inflationary pressures are rising faster than thought, the bond market will probably react negatively. That would drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond by pushing mortgage rates slightly lower. Forecasts are calling for a 0.2% increase in both readings. The final report of the week is the release of December's preliminary reading to the University of Michigan's Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and can usually have enough of an impact on the financial markets to change mortgage rates slightly if it shows a sizable miss from forecasts. Consumer sentiment or confidence is tracked because the more comfortable consumers are about their own financial situations, the more likely they are to make a large purchase in the near future. Since consumer spending makes up such a large part of our economy, any related data is watched closely. Friday's release is expected to show a reading of 75, which would be a decline from last month's final reading of 76.9. A large decline in confidence would be favorable news for rates. Also worth noting on the vaccine front is that the FDA could issue an approval for Pfizer to distribute theirs as early as this week. It is hard to predict how the markets will react if it does come. The announcement should not be a surprise after its trials showed extremely strong results. However, the stock markets have reacted favorably to nearly every positive vaccine headline over the past few months. When they do, we generally see bonds react negatively, causing mortgage rates to move higher. In theory, we shouldn’t be too concerned about a potential approval, but it still may come into play this week. Overall, Thursday is the best candidate as most important day for rates due to the CPI release and weekly unemployment figures. The calmest day may be tomorrow unless something unexpected makes headlines. It would be prudent to proceed cautiously if still floating an interest rate and closing in the near future as recent pressure in the bond market may continue this week.