This week brings us the release of four monthly economic reports that we will be watching, but only one is considered to be highly important. All of the week’s data is coming the middle days, so we can expect to see the most movement in mortgage rates then. Tomorrow and Friday have nothing of importance scheduled that is expected to affect rates except for a few Fed member speaking engagements.
Starting the week’s activities will be April's Retail Sales at 8:30 AM ET Tuesday. This is an extremely important report for the financial markets since it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.3% increase in sales from March to April. A much weaker than expected level of sales should push bond prices higher and mortgage rates lower Tuesday morning as it would signal that economic activity may not be as strong as thought. However, a larger than expected increase could fuel concerns of economic growth and inflation that would lead to bond selling, pushing mortgage rates higher.
April's Housing Starts is the first of two reports that we will get Wednesday morning. This data gives us an indication of housing sector strength and mortgage credit demand by tracking newly issued permits and actual starts of new home construction. It is expected to show an increase in new construction starts from March's reading, hinting at housing sector growth. However, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.
The second piece of data Wednesday is April's Industrial Production report at 9:15 AM ET. It measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.6% increase in production, indicating that manufacturing activity strengthened. A weaker level of output would be good news for the bond market and mortgage rates because it would indicate that the manufacturing sector is not as strong as thought. This report is considered to be moderately important, so it will likely need to show unexpected strength or weakness to cause movement in mortgage rates.
Thursday has one monthly report scheduled, April's Leading Economic Indicators (LEI) at 10:00 AM ET. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.4% increase from March's reading, meaning that the indicators are predicting activity is likely to strengthen over the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher Thursday.
Overall, Tuesday is the best candidate for most important day of the week due to the importance of the sales report. Tuesday also could bring some movement in rates. However, unless something unexpected happens, this could be a relatively calm week for mortgage pricing. Tuesday’s report is highly important, but there is little else scheduled that gives us reason to be concerned.