This week brings us the release of only two pieces of monthly economic data for the markets to digest, but we will also get the minutes from last month’s FOMC meeting and a video conference with Fed Chairman Powell. Despite the small number of economic reports, we still may have a relatively active week for mortgage rates.
February's Factory Orders will start the week's activities late tomorrow morning. This data is similar to the Durable Goods Orders report that was released the week before last, except it includes orders for both durable and non-durable goods. It will give us another measurement of manufacturing sector strength and is considered to be only moderately important to the bond and mortgage markets. Therefore, unless it varies greatly from forecasts of a 0.6% decline, I suspect that the data will have a minimal impact on tomorrow's mortgage rates.
Also worth noting about tomorrow is the fact that the stock markets were closed Friday for the Good Friday holiday. That means stocks have not had an opportunity to react to Friday’s much stronger than expected Employment report. Generally speaking, stock rallies are looked at as a negative influence on the bond market and mortgage rates. This doesn’t mean we should automatically expect an increase in rates tomorrow morning but should not be surprised to see some pressure in bonds if stocks do rally around Friday’s data in the morning.
Neither Tuesday nor Wednesday have any data that we need to be concerned with. Wednesday afternoon has the minutes from the March 16-17 FOMC meeting. Market participants will be looking at them closely as they give us insight to the Fed's current thought process and individual Fed member opinions regarding future monetary policy moves. Any surprises in the 2:00 PM ET release, particularly about inflation, economic conditions or when they may make a rate hike, could cause afternoon volatility in the markets Wednesday and possible changes in mortgage pricing. This meeting included revised economic projections and a press conference, so the likelihood of getting that surprise has been minimized.
Thursday’s only relevant economic data is last week’s unemployment figures. However, Fed Chairman Powell has a noon ET livestream speaking engagement at an International Monetary Fund (IMF) summit. The topic is the global economy, raising the possibility of seeing the markets react to his words. This may be a non-event or cause a noticeable move in stocks and bonds.
March's Producer Price Index (PPI) will be posted early Friday morning. It measures inflationary pressures at the producer 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 more important core data that excludes volatile food and energy prices. Analysts are expecting to see a 0.5% increase in the overall reading and a 0.2% rise in the core reading.
Overall, no day stands out as a clear candidate for most active day for rates. Wednesday afternoon has the potential to be it if the minutes give us a big surprise, while the same goes for Thursday’s livestream appearance by Chairman Powell. The most important data comes Friday morning, so if the other events are duds, we could see the most movement in rates that day since inflation is a hot topic currently. Even though this week’s calendar is fairly light compared to recent weeks, it still would be prudent to be attentive to the headlines and market movement if floating an interest rate and closing soon.