This holiday-shortened week brings us the release of four economic reports that have the potential to move mortgage rates, but none are considered to be highly important to the markets. There also are a couple of Treasury auctions set to take place that may influence mortgage rates the middle of the week. There is nothing of importance scheduled for release tomorrow.
Tuesday has the first report worth watching with March's Consumer Confidence Index (CCI) from the New York-based Conference Board at 10:00 AM ET. This index gives 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 would indicate that consumers are less apt to make a large purchase in the near future. If it reveals that confidence looks to be growing, we may see bond traders sell as economic growth may rise, pushing mortgage rates higher Tuesday morning. It is expected to show a reading of 130.4 down from February's 130.8 reading. The lower the reading, the better the news it is for bonds and mortgage rates.
In addition to this week's few economic reports, there are two relatively important Treasury auctions that may also influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes Tuesday and 7-year Notes on Wednesday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into the bond market. The buying of bonds that follows often translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET auction day, so look for any reaction to come during afternoon hours.
The second and final revision to the 4th Quarter GDP will be released at 8:30 AM ET Wednesday. The Gross Domestic Product is the total of all goods and services produced in the U.S. and is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 2.6% last quarter, up slightly from the previous estimate of 2.5% that was released last month. Analysts are now more concerned with next month's preliminary reading of the 1st quarter than data from three to six months ago. So, unless we see a significant revision, this report probably will have little impact on Wednesday's mortgage rates.
February's Personal Income & Outlays report is the first of two reports set for Thursday morning. This data helps us measure consumers' ability to spend and current spending habits, which is important to the mortgage market because of the influence that consumer spending related information has on the financial markets. If a consumers' income is rising, they are more likely to make additional purchases in the near future. Therefore, weaker than expected readings would be good news for bonds and mortgage rates. Analysts are currently calling for a 0.4% rise in income and a 0.2% increase in spending.
Thursday's second report comes from the University of Michigan just before 10:00 AM ET. Their revised March Consumer Sentiment Index will give us another indication of consumer confidence, which hints at consumers' willingness to spend. Rising confidence is considered bad news for the bond market and mortgage pricing because it usually means consumers are more willing to spend. Thursday's report is expected to show a reading of 102.0, unchanged from the preliminary reading posted two weeks ago. Favorable results for bonds and mortgage rates would be a sizable decline in confidence.
The bond market is expected to close early Thursday ahead of the Good Friday holiday. The stock and bond markets will be closed all day Friday and will reopen for regular trading Monday. It is common to see some pressure in bonds as investors make moves to protect themselves over the long holiday, so don't be surprised if bonds weaken slightly early Thursday afternoon before closing.
Overall, Thursday is likely to be the most active day for mortgage rates with two of the week’s most important reports being posted and pre-holiday portfolio adjustments to be concerned about. The least active day could be any other day. There isn’t much to be worried about this week in terms of events that may alter mortgage rates, but it still would be prudent to keep an eye on the markets if still floating an interest rate as things can change quickly.