Mortgage Market Update
Updated: Apr 5, 2021
This holiday-shortened week has only four economic reports scheduled for release. Two of those are considered to be highly important to the markets and mortgage pricing. Tomorrow is the only day with nothing of relevance scheduled. It appears the most important reports are set for the latter days, raising the possibility of seeing the most movement in rates the second half of the week.
March's Consumer Confidence Index (CCI) will kick off this week’s calendar late Tuesday morning. The New York-based Conference Board will post this index, giving us an indication of consumers' willingness to spend. Bond traders watch this data closely because consumer spending makes up over two-thirds of our economy. If this report shows that consumer confidence in their own financial situation is falling, it will indicate that consumers are less apt to make a large purchase in the near future. However, analysts are expecting to see an increase, pushing the index up to 97.0 from February’s 91.3. Good news for rates would be a decline.
The ADP Employment report is set for early Wednesday morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because it has the potential to influence rates, we are watching it. Market participants are expecting it to show that approximately 500,000 new private-sector payrolls were added back to the economy last month. The lower the number of jobs, the better the news it is for mortgage rates.
Thursday’s sole monthly release will be the Institute for Supply Management's (ISM) manufacturing index for March at 10:00 AM ET. This index gives us an extremely important measurement of manufacturer sentiment by surveying trade executives about business conditions. It is one of the freshest pieces of economic data each month. A reading above 50 means more surveyed executives felt business improved during the month than those who said it had worsened, signaling growth in the manufacturing sector. This month's report is expected to show a reading of 61.3, up from February’s 60.8.
The most important data of the week will come early Friday morning when the Labor Department posts March's Employment report, revealing the U.S. unemployment rate, the number of jobs added or lost during the month and change in average earnings. This is arguably the single most important economic report we get each month. Forecasts show that the unemployment rate fell to 6.0% while payrolls jumped 620,000. Average earnings are predicted to show a 0.2% increase. Weak readings are favorable for mortgage rates, so the lower the payroll number and higher unemployment rate, the better the news it is.
Overall, Friday is a strong candidate as the most active day for mortgage rates due to the importance the Employment report carries. Thursday could yield a noticeable change in rates also. The stock markets will be closed Friday for the Good Friday holiday, meaning we won’t have stock reaction to the employment data until Monday. The bond market is open Friday but will close at 2:00 PM ET, reopening for regular trading Monday morning. Even though we don’t have a large number of reports set for release this week, it still likely will be an active week for the financial and mortgage markets. Accordingly, proceed cautiously if still floating an interest rate and closing in the near future.