This week has five pieces of monthly economic data scheduled for release that have the potential to influence mortgage rates. None of the data is considered to be key or a highly important report. We are in earnings season where corporations post their quarterly earnings and projections. Strong earnings reports should fuel a stock rally that pressures bonds and leads to higher mortgage rates. On the other hand, disappointing earnings news should make bonds more attractive to investors and lead to rate improvements.
There is nothing of importance set for tomorrow. March's Housing Starts will start the week's releases early Tuesday morning. This report tracks groundbreakings of new home construction, giving us a measurement of housing sector strength and future demand for mortgage credit. It is not considered to be highly important to the markets but does draw enough attention to influence trading if it reveals surprisingly strong or weak numbers. The report will be posted at 8:30 AM ET and is expected to show a small decline in starts from February to March. Good news for mortgage rates would be a sizable decline in starts that points toward housing sector weakness.
Also Tuesday morning will be the release of March's Industrial Production data at 9:15 AM ET. It tracks output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for 0.4% increase in production from February's level. This data is considered to be only moderately important to rates, so it will take more than just a slight variance to influence bond trading and mortgage pricing. Signs of manufacturing sector strength are considered negative news for mortgage rates, while a decline in output would be favorable news for the bond market and mortgage shoppers.
Wednesday’s only relevant release comes during afternoon hours. That is when the Federal Reserve's Beige Book report will be posted. This report is named simply after the color of its cover but details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Generally speaking, signs of strong economic growth or inflation rising from the last update would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be ideal for mortgage rates. The report will be released at 2:00 PM ET, so any reaction will come during mid-afternoon trading.
Next up is the Conference Board’s Leading Economic Indicators (LEI) for March. This data attempts to predict economic activity over the next three to six months. It is also considered to be only a moderately important report, so at best we can expect to see a slight movement in rates as a result of this data. It is expected to show a 0.3% increase from February's reading, meaning it is predicting moderate growth in economic activity over the next several months. A decline would be considered good news for the bond market and could lead to slightly lower mortgage rates Thursday.
The final report of the week will be March's Existing Homes Sales numbers from the National Association of Realtors at 10:00 AM ET Friday. This report gives us an indication of housing sector strength and mortgage credit demand. It can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a drop in home resales because a soft housing sector makes broader economic growth more difficult. Analysts are expecting to see an increase in sales between February and March. The larger the increase, the worse the news it is for bonds and mortgage rates.
Overall, there is nothing scheduled this week that is expected to create much volatility or be a market mover. It is worth noting though that we had a couple of important reports released Friday morning when the markets were closed for the holiday. Both of these reports showed very bond-friendly results, but the markets have not an opportunity to react to them yet. This will happen tomorrow morning and should start the week off with a nice improvement in mortgage pricing. I don't see any particular day as a good candidate for most important of the week except tomorrow and that is due to Friday’s data. Still, despite the lack of key economic data, it would still be prudent to maintain contact with your mortgage professional if floating an interest rate as market conditions can change at any time.