This week has five economic reports scheduled for release, several of which are likely to heavily influence the markets and mortgage pricing. Not only are some of the reports usually considered to be highly important, but they also cover March instead of February. March’s data will give us much better insight into how bad the coronavirus is starting to affect the economy, meaning it will have a bigger impact on daily trading.
March's Consumer Confidence Index (CCI) will kick off this week’s calendar late Tuesday morning. The New York-based Conference Board will post this index, giving 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 will indicate that consumers are less apt to make a large purchase in the near future. This is normally considered a moderately important release, but with so much else going in the markets right now it likely will not have much of an impact on trading or mortgage pricing.
The ADP Employment report is set for early Wednesday morning, which has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. This report tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that usually follows a couple days later. Still, because it covers March, we could see a noticeable reaction to the results. Market participants are expecting it to show that new payrolls fell somewhere in the neighborhood of 175,000. The lower the number of jobs, the better the news it is for mortgage rates.
Report number two for Wednesday will be the Institute for Supply Management's (ISM) manufacturing index for March at 10:00 AM ET. This index gives us an extremely important measurement of manufacturer sentiment by surveying trade executives about business conditions. It is one of the freshest pieces of economic data each month. A reading below 50 means more surveyed executives felt business worsened during the month than those who said it had improved. That is a sign of weakness in the manufacturing sector. This month's report is expected to show a sizable decline, related to the coronavirus. Forecasts are calling of a reading of 44.0, down from February’s 50.1.
Thursday’s sole monthly release is March’s Factory Orders report that tracks new orders at U.S. factories for both durable and non-durable goods. Last week’s Durable Goods Orders release gave us a good part of Thursday’s release, so don’t expect to see much of a reaction in the markets.
What will draw attention Thursday is the weekly unemployment update. After last week’s record shattering number of new claims for benefits, traders will be looking to this report to give us a current snapshot of the employment sector. Another large number of claims is expected, but forecasts vary by a wide margin. The larger the number new claims, the better the news it is for bonds and mortgage rates.
The most important data of the week will come early Friday morning when the Labor Department posts March's Employment report, revealing the U.S. unemployment rate, the number of jobs added or lost during the month and change in average earnings. The coronavirus is believed to have heavily influenced these numbers. Forecasts show that the unemployment rate jumped 0.5% to 4.0% while payrolls dropped by 150,000. Average earnings are expected to show a 0.2% increase, but it likely will not be of much interest this month. Focus will be on the unemployment and payroll readings. Weak readings are favorable for mortgage rates. It is worth noting that this report compiles data from the week of March 9th – 13th, so it may not reflect the full impact the pandemic is having on the employment sector.
Overall, any day of the week may end being the most active for mortgage rates. As we have seen the past several weeks, it doesn’t take a major economic report for the markets to go crazy. That said, they will likely be paying more attention to the economic data than they have since the crisis began. We do have some reports scheduled this week that traditionally are considered potential market movers with the most important ones coming the middle and latter days. We have seen a downward trend in rates recently, which should continue for the immediate future. Still, if floating an interest rate, it would be wise to keep an eye on the markets and that can change at any time.