This week brings us the release of only three pieces of economic data that may impact mortgage rates in addition to the minutes from the latest FOMC meeting. None of the releases are considered key or expected to be a market mover, but one of the reports carries enough importance to heavily affect mortgage pricing if it shows a decent-sized variance from forecasts. We also need to watch for the final corporate earnings reports of the quarter and trade war news as they can directly influence stocks enough to change mortgage rates.
Tomorrow has nothing of relevance scheduled. The National Association of Realtors will give us their Existing Home Sales report at 10:00 AM ET Tuesday. This data will give us a measurement of housing sector strength by tracking resales of existing homes in the U.S. This type of data is relevant because a weakening housing sector makes broader economic growth less likely. Current forecasts are calling for rise in home sales between March and April. Ideally, the bond market would prefer to see a large decline, indicating sector weakness. A large increase in sales could lead to bond weakness and a slight increase in mortgage rates Tuesday morning since a strengthening housing sector raises optimism about general economic growth.
Wednesday’s only relevant event is the release of the minutes of the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns or economic growth. The goal is to form opinions about the Fed's next move regarding interest rates. There is much debate in the markets whether or not the Fed will adjust key short-term rates. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading Wednesday.
The second monthly economic report will be April's New Home Sales report at 10:00 AM ET Thursday. This data gives us a small measurement of housing sector strength and future mortgage credit demand but probably will not have much of an impact on mortgage pricing unless it shows a sizable variance from forecasts. Analysts are expecting to see a decline in sales from March's level, meaning the new home portion of the housing sector softened last month.
April's Durable Goods Orders report will close out the week’s calendar at 8:30 AM ET Friday. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years such as airplanes, appliances and electronics. It is currently expected to show a decline in new orders of approximately 2.0%, hinting that the manufacturing sector weakened last month. That would be relatively good news for the bond market and mortgage rates, but this data is known to be quite volatile. Therefore, a small variance from forecasts will likely have little impact on Friday's mortgage rates. The larger the decline, the better the news it is for mortgage rates.
Overall, the best candidate for most active day is Friday since it has the most important economic data, but Wednesday afternoon could be interesting if the FOMC minutes shows any big surprises. The calmest day may be tomorrow or Thursday. Despite having a small number of economic reports, it is still possible for the markets to make large moves. Therefore, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.