This week brings us the release of five pieces of economic data that is relevant to the mortgage markets. However, none of this week’s reports are considered to be highly important or potentially market-moving. We should still see come movement in rates this week, but they will likely be small moves.
Tomorrow has nothing of importance set for release. September's Industrial Production data will start the week’s activities at 9:15 AM ET Tuesday. This release will give us an indication of manufacturing strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting it to show a 0.2% increase in output from August's level, meaning that manufacturing activity strengthened slightly last month. A large increase in production would be negative for bonds and mortgage rates as it would indicate economic strength. A decline in output would be favorable for mortgage shoppers.
Wednesday has two reports scheduled that we will be watching. The first is September's Housing Starts at 8:30 AM ET. This Commerce Department report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a drop in new home starts between August and September. I believe we need to see a significant surprise in this data for it to have an impact on Wednesday's mortgage rates.
The Federal Reserve will release their Beige Book report Wednesday afternoon. This report details economic conditions throughout the U.S. by Federal Reserve region. It is relied upon heavily by the Fed to determine monetary policy during their FOMC meetings. If it shows surprisingly softer economic activity since the last report, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing or rapidly expanding economic activity in many regions, we may see mortgage rates revise higher as a result.
Thursday’s sole monthly release is September's Leading Economic Indicators (LEI) from the Conference Board. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.1% from August's reading. This would indicate that economic activity is likely to remain fairly flat over the next couple of months. A small increase would not be of much concern to the bond and mortgage market. A large decline would be favorable to mortgage pricing.
The week’s calendar closes late Friday morning when September's Existing Home Sales data. This report will give us an indication of housing sector strength and mortgage credit demand by tracking home resales. It is expected to show a small decline in sales from August to September, meaning the housing sector was flat. That would be relatively good news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors. Ideally, it would show a sizable decline in sales that points toward a weakening housing sector.
Overall, there is nothing scheduled this week that is of much concern. The most active day for mortgage rates could be any, and the same can be said for calmest day. I am expecting to see minor changes from day to day, but it will take something unexpected for rates to make a big move. We are heading into corporate earnings season, so watching stocks is a wise move also. Weaker than anticipated earnings from some key names should hurt stocks and boost bonds, leading to lower mortgage rates. On the other hand, a stock rally could pressure bonds and push mortgage rates a little higher. Despite the lack of any key economic releases, it still would be prudent to maintain contact with your mortgage professional if floating an interest rates and closing in the near future.