This week brings us the release of only three pieces of economic data that likely will affect mortgage rates, but two of them are considered to be highly important. There also is a batch of Fed member speaking engagements, including one by Chairman Powell. These always have the potential to cause movement in the markets, particularly when there are few economic reports or other events to drive trading. The bond market will be closed tomorrow in observance of Veteran’s Day, although the stock markets will be open for trading. Because of the holiday, many lenders may use Friday afternoon’s pricing for tomorrow’ rates while others may not accept new locks until Tuesday. With no data and no bond trading, this report will not be updated tomorrow.
October's Consumer Price Index (CPI) will start this week’s activities early Wednesday morning. The CPI is the sister report to last Friday's PPI, except it measures inflationary pressures at the consumer level of the economy and is one of the most important reports the bond market sees each month. If it reveals stronger than expected readings, indicating that inflationary pressures are rising at the consumer level, the bond market will probably react negatively and cause mortgage rates to move higher. Analysts are expecting to see a 0.3% increase in the overall reading and a 0.2% increase in the core data. The core reading is the more important of the two because it excludes more volatile food and energy prices.
The Commerce Department, who will give us October's Retail Sales early Thursday morning. This data measures consumer level or retail spending. It is considered extremely important to the markets because consumer spending makes up over two-thirds of the U.S. economy. It is expected to show a 0.5% increase in retail-level spending, meaning consumers spent more last month than they did in September. A larger increase in spending would be considered negative news for bonds because rising spending fuels economic growth and raises inflation concerns in the bond market. If Thursday's report reveals a decline that indicates consumers spent less than thought, bonds should react favorably, pushing mortgage rates lower. If it shows a larger rise, mortgage rates will likely move higher.
Industrial Production data for October will close this week’s calendar mid-morning Friday. The 9:15 AM ET report will give us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Forecasts are calling for a 0.3% increase in production, indicating moderate strength in the manufacturing sector. Stronger levels of production would be considered bad news for the bond market and mortgage rates, but this report is not expected to greatly influence the markets. Therefore, it will likely take a sizable variance from forecasts for it to have a noticeable impact on Friday's mortgage pricing.
Overall, the most important day of the week is either Wednesday or Thursday as they have equally important economic releases. The calmest day could be Tuesday but following a long weekend for the bond market we still may see movement in rates that day also. While this week likely will not be as active for mortgage rates as the past couple have been, there still is a decent chance of seeing multiple days with noticeable changes to mortgage rates. Therefore, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.