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Lake Tahoe Mortgage Rate Trends- February 25, 2016

Thursday’s bond market opened in positive territory despite stronger than expected manufacturing data. The stock markets are calm for the most part with the Dow down 3 points and the Nasdaq down 15 points. The bond market is currently up 10/32 (1.71%), but due to weakness late yesterday we still should see an increase of approximately .125 of a discount point in this morning’s mortgage rates.

Yesterday’s 5-year Treasury Note auction went pretty well with several benchmarks showings a decent level of investor interest in the securities. That news helped the bond market slow the downward move that was already in progress. Unfortunately, that was short-lived and bonds continued to slip lower as the afternoon progressed. However, yesterday’s sale results do help us to remain optimistic about today’s 7-year Note auction. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading. Another good auction good help boost bond prices and possibly cause a small improvement to mortgage rates later today.

This morning’s economic data gave us mixed results with the more important of the two being the negative news. The good news came in the weekly unemployment update at 8:30 AM ET. It showed that 272,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week’s 262,000 and slightly higher than the 270,000 that was expected. Because rising claims hints at a softening labor market and is a sign of economic weakness, we can consider this news to be favorable for mortgage rates.

The more important data was January’s Durable Goods Orders data that revealed a 4.9% jump in new orders for big-ticket products such as electronics, refrigerators, airplanes and autos. This was much higher than the 2.0% increase that was forecasted. Even a secondary reading that excludes more volatile transportation-related orders, like new airplanes, exceeded expectations (up 1.8% vs 0.4%). These readings indicate a better than thought manufacturing sector that causes us to label the data negative for mortgage shoppers.

Tomorrow has the remaining three relevant pieces of economic data. The first of two revisions to the 4th Quarter GDP reading is scheduled for release at 8:30 AM ET. The GDP is considered the benchmark reading of economic growth or contraction because it is the total sum of all goods and services produced in the U.S. Analysts’ forecasts currently call for an annual rate of growth of 0.4%, down from the initial estimate of 0.7% that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing tomorrow.

January’s Personal Income and Outlays data is also scheduled for release at 8:30 AM ET tomorrow. This data gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.4% while spending is expected to rise 0.3%. Lower levels of income means consumers have less money to spend. And weaker levels of consumer spending helps limit overall economic growth, making long-term securities such as mortgage-related bonds more attractive to investors. Therefore, the weaker the readings, the better the news it would be for mortgage rates.

The University of Michigan’s revision to their Index of Consumer Sentiment for February will close out the week’s calendar just before 10:00 AM ET tomorrow. Current forecasts show this index rising slightly from its preliminary estimate of 90.7. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend, but is not considered to be a major market mover. This means it will probably not have a significant impact on mortgage rates, especially with GDP revision and Personal Income & Outlays reports being released the same day.

Lake Tahoe Mortgage Rate Trends- February 24, 2016

Wednesday’s bond market opened in positive territory, extending strength that came late yesterday. Stocks are helping the cause by showing losses of 205 points in the Dow and 58 points in the Nasdaq. The bond market is currently up 14/32 (1.66%), which should improve this morning’s mortgage rates by approximately .125 – .250 of a discount point if comparing to Tuesday’s early pricing.

The Commerce Department announced late this morning that sales of newly constructed homes fell 9.2% last month, falling well short of expectations. This data indicates that the new home portion of the housing sector was weaker than many had thought, making the data good news for bonds and mortgage rates. However, this report is not considered to be highly important to the bond market and had a minor impact on this morning’s rate improvement. Bonds appeared to be on their way to a positive morning before this report was posted.

We also have the first of this week’s two Treasury auctions today that may influence bond trading enough to affect mortgage rates. 5-year Notes are being sold today while 7-year Notes go tomorrow. 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 afternoon selling in the bond market that leads to upward revisions to mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

Besides the 7-year Note auction tomorrow, there are also two economic reports scheduled for release. One is much more important to the markets than the other. The important monthly report is January’s Durable Goods Orders data at 8:30 AM ET. It will give us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. Products such as electronics, refrigerators, airplanes and autos are examples of these big-ticket items. Analysts are expecting to see a 2.0% increase in new orders, hinting at manufacturing sector growth. This data is known to be volatile from month to month, so don’t be surprised if a modest variance from forecasts does not have much of an influence on tomorrow’s mortgage rates.

The less important one is the weekly unemployment update from the Labor Department. They are expected to say that 270,000 new claims for unemployment benefits were filed last week, up from the previous week’s 262,000. Ideally, we want to see a large increase in initial claims because rising claims indicate a weakening employment sector. This report will also be posted at 8:30 AM ET, but it usually takes a wide variance from expectations for it to have an impact on mortgage rates and the Durable Goods data carries much more significance than this report.

Lake Tahoe Mortgage Rate Trends- February 23, 2016

Tuesday’s bond market opened in negative territory but has since moved into positive ground following favorable late morning economic news. The stock markets are showing fairly sizable losses with the Dow down 147 points and the Nasdaq down 53 points. The bond market is currently up 5/32 (1.74%), but due to weakness late yesterday we likely will see little change in this morning’s mortgage rates. The rebound during early trading will offset the small increase we were expecting in today’s pricing.

January’s Existing Home Sales data was posted at 10:00 AM ET this morning. The National Association of Realtors reported that home resales rose slightly last month when analysts were expecting to see a decline. This means the housing sector was a little stronger than many had thought, making the data negative for bonds.

The Conference Board gave us February’s Consumer Confidence Index (CCI) this morning. They announced a reading of 92.2 that fell well short of the 97.3 that was expected. The weaker reading means surveyed consumers were not nearly as confidant about their personal financial situations than many had predicted. Since waning confidence usually translates into weaker levels of spending and softer economic growth, this is good news for bonds and mortgage rates. It was this report that helped bring bonds from early losses into positive ground.

January’s New Home Sales report is tomorrow’s only relevant data. It will be posted at 10:00 AM ET and will give us a measurement of housing sector strength, specifically the new home portion of the sector. This is the least important report of the week, and is the sister report to today’s Existing Home Sales data. This report usually do not have a significant impact on bond trading or mortgage rates, so it will take a wide variance from forecasts for it to affect tomorrow’s mortgage pricing. Tomorrow’s report is expected to show a decline in sales of newly constructed homes, hinting at weakness in the new home portion of the housing sector. The larger the decline, the better the news it is for bonds and mortgage rates.

Also tomorrow is the first of this week’s two Treasury auctions that may influence bond trading enough to affect mortgage rates. There will be an auction of 5-year Notes tomorrow and 7-year Notes on Thursday. 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 afternoon selling in the bond market that leads to upward revisions to mortgage rates. However, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates.

Lake Tahoe Mortgage Rate Trends- February 22, 2016

Monday’s bond market has opened in negative territory with stocks in rally mode this morning. The Dow is currently up 195 points while the Nasdaq has gained 65 points. The bond market is currently down 6/32 (1.76%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point over Friday’s morning pricing.

There is no relevant economic data set for release today. However, the rest of the week brings us seven economic reports to be concerned with in addition to two potentially relevant Treasury auctions. A couple of the reports are considered to be important to the markets and mortgage rates. With so much scheduled this week that can move rates, there is a strong chance of seeing a pretty active week in the mortgage market.

The first piece of data is January’s Existing Home Sales report by the National Association of Realtors late tomorrow morning. This data tracks home resales throughout the country, giving us a measurement of housing sector strength. It is expected to show a decline in sales of existing homes, meaning the housing sector softened last month. Ideally, the bond market would like to see a sizable decline in sales because weak housing makes broader economic growth more difficult. Since long-term securities such as mortgage bonds tend to thrive during weaker economic conditions, weak housing numbers would be good news for mortgage rates.

February’s Consumer Confidence Index (CCI) will also be posted at 10:00 AM ET tomorrow morning. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from the 98.1 reading in January to 97.2 this month. A lower reading would be considered good news for bonds and mortgage rates since it would indicate consumers are less likely to make a large purchase in the near future than many thought.

Overall, I think Friday is the most important day of the week but Thursday may be pretty active also. The calmest should be today or Wednesday. If floating an interest rate, it would be extremely prudent to maintain contact with your mortgage professional this week as bond yields (and mortgage rates) could make a noticeable higher if a majority of the data does not show weaker than predicted results.

Lake Tahoe Mortgage Rate Trends- February 21, 2016

This week brings us the release of seven economic reports to be concerned with in addition to two potentially relevant Treasury auctions. A couple of the reports are considered to be important to the markets and mortgage rates. There is something scheduled each day that can move rates except for tomorrow, so there is a strong chance of seeing a pretty active week for mortgage rates.

The first piece of data is January’s Existing Home Sales report by the National Association of Realtors late Tuesday morning. This data tracks home resales throughout the country, giving us a measurement of housing sector strength. It is expected to show a decline in sales of existing homes, meaning the housing sector softened last month. Ideally, the bond market would like to see a sizable decline in sales because weak housing makes broader economic growth more difficult. Since long-term securities such as mortgage bonds tend to thrive during weaker economic conditions, weak housing numbers would be good news for mortgage rates.

February’s Consumer Confidence Index (CCI) will also be posted at 10:00 AM ET Tuesday morning. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from the 98.1 reading in January to 97.2 this month. A lower reading would be considered good news for bonds and mortgage rates since it would indicate consumers are less likely to make a large purchase in the near future than many thought.

January’s New Home Sales report will be posted at 10:00 AM ET Wednesday morning. This is the least important report of the week, and is the sister report to the Existing Home Sales data. They measure housing sector strength and mortgage credit demand, but usually do not have a significant impact on bond trading or mortgage rates unless they show significant surprises. Wednesday’s report is expected to show a decline in sales of newly constructed homes, hinting at weakness in the new home portion of the housing sector. The larger the decline, the better the news it is for bonds and mortgage rates.

Thursday’s only monthly important report is January’s Durable Goods Orders data at 8:30 AM ET. It will give us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for items expected to last three or more years. Products such as electronics, refrigerators, airplanes and autos are examples of these big-ticket items. Analysts are expecting to see a 2.0% increase in new orders, hinting at manufacturing sector growth. This data is known to be volatile from month to month, so don’t be surprised if a modest variance from forecasts does not have much of an influence on Thursday’s mortgage rates.

Friday has the remaining three relevant pieces of economic data. The first of two revisions to the 4th Quarter GDP reading is scheduled for release at 8:30 AM ET Friday morning. The GDP is considered the benchmark reading of economic growth or contraction because it is the total sum of all goods and services produced in the U.S. Analysts’ forecasts currently call for an annual rate of growth of 0.4%, down from the initial estimate of 0.7% that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing Friday.

January’s Personal Income and Outlays data is also scheduled for release at 8:30 AM ET Friday morning. This data gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for an increase in income of 0.4% while spending is expected to rise 0.3%. Lower levels of income means consumers have less money to spend. And weaker levels of consumer spending helps limit overall economic growth, making long-term securities such as mortgage-related bonds more attractive to investors. Therefore, the weaker the readings, the better the news it would be for mortgage rates.

The University of Michigan’s revision to their Index of Consumer Sentiment for February will close out the week’s calendar just before 10:00 AM ET Friday. Current forecasts show this index rising slightly from its preliminary estimate of 90.7. This index is fairly important because it helps us measure consumer confidence that translates into consumer willingness to spend, but is not considered to be a major market mover. This means it will probably not have a significant impact on mortgage rates, especially with GDP revision and Personal Income & Outlays reports being released Friday morning.

In addition to this week’s 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 Wednesday and 7-year Notes on Thursday. 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, sales with higher levels of investor demand usually make bonds more attractive to investors and brings additional funds into the bond market. The buying of bonds that follows translates into lower mortgage rates.

Overall, I think Friday is the most important day of the week but Thursday may be active also. The calmest could be tomorrow or Wednesday but we should still see some movement in rates those days. If floating an interest rate, it would be extremely prudent to maintain contact with your mortgage professional this week as bond yields (and mortgage rates) could make a noticeable higher if a majority of the data does not show weaker than predicted results.

Lake Tahoe Mortgage Rate Trends- February 18, 2016

Thursday’s bond market has opened in positive territory, due mostly to strength in overseas bond markets. The stock markets are showing fairly modest losses to help the cause with the Dow down 9 points and the Nasdaq down 27 points. The bond market is currently up 12/32 (1.77%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

Yesterday’s afternoon release of the FOMC minutes did not show any significant surprises. They did indicate that the Fed is more cautious or concerned about global financial and economic pressures and their impact on our economy. That could help delay the Fed’s next rate hike if there is not a noticeable improvement by their next meeting in mid-March. The news had little impact on yesterday afternoon’s mortgage pricing.

Last week’s unemployment figures were posted at 8:30 AM this morning, revealing 262,000 new claims for benefits. This was a decline from the previous week’s 269,000 initial filings and was lower than the 274,000 that was expected. That makes the data negative for mortgage rates because it hints at a strengthening employment sector. However, because this is only a weekly update, the news did not negatively impact this morning’s pricing.

Also posted this morning was January’s Leading Economic Indicators (LEI) that showed a 0.2% decline. That reading means the indicators are predicting slightly softer economic growth over the next several months. While that technically is good news for bonds, it matched forecasts and did not influence this morning’s rates.

Tomorrow has only one report scheduled for release but it is a key inflation reading. At 8:30 AM ET tomorrow, January’s Consumer Price Index (CPI) will be posted. The CPI measures inflationary pressures at the important consumer level of the economy. With exception to maybe the Employment report, the CPI is the single most important report that we see each month. Its results can have a significant impact on the financial markets, especially on long-term securities such as mortgage-related bonds. Inflation isn’t exactly a concern currently, but there are many that feel the Fed’s monetary policy decisions are going to fuel rapid inflation down the road, so analysts still track the readings closely. Current inflation readings will also influence the Fed’s decisions regarding rate increases. The report is expected to show a 0.1% decline in the overall index and a 0.1% rise in the more important core data that excludes food and energy costs. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall tomorrow morning.

Lake Tahoe Mortgage Rate Trends- February 17, 2016

Wednesday’s bond market has opened in negative territory following mostly unfavorable economic news. Stocks are helping to pressure bonds with the Dow up 177 points and the Nasdaq up 53 points. The bond market is currently down 15/32 (1.82%), which should push this morning’s mortgage rates slightly higher than yesterday’s morning pricing.

The first of today’s three economic reports was January’s Producer Price Index (PPI) at 8:30 AM ET. It showed the overall reading with a 0.1% increase when analysts were expecting to see 0.2% decline. The more important core data that excludes more volatile food and energy costs showed similar results with a 0.4% increase, exceeding expectations of no change from December’s level. These readings indicate that inflationary pressures were stronger at the producer level of the economy than many had thought, making the data bad news for inflation-sensitive securities such as mortgage-related bonds.

January’s Housing Starts report was also released at 8:30 AM, revealing a 3.8% decline in new home groundbreakings last month. This was well off of forecasts that were calling for an increase in new home starts. The decline is a sign of weakness in the new home portion of the housing sector. This allows us to consider the data good news for bonds and mortgage rates. Unfortunately, this report is not considered highly important, so its impact on today’s trading and rates has been minimal.

The final piece of economic data for the day was January’s Industrial Production report at 9:15 AM ET. This report tracks output at U.S. factories, mines and utilities, giving us a measurement of manufacturing sector strength. Today’s release showed a 0.9% jump in output, exceeding forecasts of a 0.3% rise. That is also bad news for bonds and mortgage pricing because it hints that manufacturing activity may be rebounding after showing signs of weakness recently.

We also have the minutes from the most recent FOMC meeting being posted later today. Traders will be looking for any indication of the Fed’s next move regarding monetary policy, particularly when the next rate increase may come. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. These minutes may lead to afternoon volatility, or they may be a non-factor. However, they do carry the potential to influence mortgage rates so they should be watched.

Last week’s unemployment figures is tomorrow’s only data, coming at 8:30 AM ET. They are expected to show that 274,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week’s 269,000 initial filings. The larger the number of new claims, the better the news it is for bonds and mortgage rates because rising claims hint at a softening employment sector.

Lake Tahoe Mortgage Rate Trends- February 16, 2016

Tuesday’s bond market has opened in negative territory with stocks showing early strength following the long weekend. The Dow is currently up 93 points while the Nasdaq is up 61 points. The bond market is currently down 7/32 (1.77%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point over Friday’s morning pricing.

There is nothing of importance scheduled for release today. The rest of the week brings us the release of five pieces of economic data along with the minutes from the most recent FOMC meeting. The markets were closed yesterday in observance of the President’s Day holiday, but weakness after pricing was posted Friday is contributing to this morning’s increase in rates.

Tomorrow is going to be an active day with four things set for release that may influence mortgage rates. They start when the Labor Department releases their Producer Price Index (PPI) for January at 8:30 AM ET. It measures inflationary pressures at the producer level of the economy and is considered to be one of the key measures of inflation we see each month. There are two portions of the report that analysts watch- the overall reading and the core data reading. The core data is more important to market participants because it excludes more volatile food and energy prices. It is expected to show a decline of 0.2% in the overall reading and no change in the core data. Good news for bonds would be a decline in both readings, particularly the core data as it would ease concerns about future inflation that make long-term securities less attractive to investors.

Next up is January’s Housing Starts, also set be posted early tomorrow morning. This report gives us an indication of housing sector strength and mortgage credit demand by tracking new housing construction starts. It usually does not affect rates unless the results vary greatly from forecasts. Current forecasts are calling for a rise in construction starts of new housing. That would be negative news for the bond market and mortgage rates because it would point towards economic gains. A weak housing sector makes broader economic growth less likely in the near future, which makes bonds more attractive to investors. Therefore, the smaller the number of starts, the better the news it is for mortgage rates.

They will be followed by January’s Industrial Production report at 9:15 AM ET. It helps us measure manufacturing sector strength by tracking output at U.S. factories, mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see a 0.3% increase in production from December to January. A decline in output would be good news and should push bond prices higher, helping to lower mortgage rates tomorrow.

Tomorrow also brings us the release of the minutes from the most recent FOMC meeting. Traders will be looking for any indication of the Fed’s next move regarding monetary policy, particularly when the next rate increase may come. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. These minutes may lead to afternoon volatility tomorrow, or they may be a non-factor. However, they do carry the potential to influence mortgage rates so they should be watched.

Lake Tahoe Mortgage Rate Trends- February 12, 2016

Friday’s bond market has opened in negative territory as stocks show early strength. The Dow is currently up 159 points while the Nasdaq has gained 19 points. The bond market is currently down 18/32 (1.70%), which with the weakness that we saw late yesterday should push this morning’s mortgage rates higher by approximately .375 of a discount point compared to Thursday’s early rates.

The Commerce Department announced early this morning that consumer-level sales rose 0.2% last month, matching forecasts. An upward revision to December’s sales reverses the previously reported decline in spending. The report indicates consumers spent a little more than they did in December, but still within expectations. This data is relevant because consumer spending makes up over two-thirds of the U.S. economy. We can consider this particular report neutral to slightly negative for mortgage rates simply due to the upward revision in December’s sales.

We also got the University of Michigan’s Index of Consumer Sentiment for February late this morning. It came in at a lower than expected reading of 90.7. That means surveyed consumers were less optimistic about their own financial situations than January. That is good news for bonds because waning confidence usually translates into weaker levels of consumer spending and softer economic growth.

Next week has a handful of relevant economic reports scheduled for release in addition to the minutes from the most recent FOMC meeting. The markets are closed Monday in observance of the President’s Day holiday and none of the reports are set for release Tuesday. Look for details on next week’s events in Sunday evening’s weekly preview.

Lake Tahoe Mortgage Rate Trends- February 11, 2016

Thursday’s bond market has opened well in positive territory as overnight gains extend into this morning’s trading. Stocks are continuing their slide with the Dow down 222 points and the Nasdaq down 39 points. The bond market is currently up 22/32 (1.61%), which with strength late yesterday should improve this morning’s mortgage rates by approximately .375 of a discount point if comparing to Wednesday’s morning pricing.

Yesterday’s relatively important 10-year Treasury auction went pretty well. Bonds improved during afternoon trading, but I don’t believe this sale played too much of a role in that move. It does however, help us to be optimistic about today’s 30-year Bond auction. If demand for these securities is strong, we could see bonds extend this morning’s gains later today. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

So what is fueling this unexpected bond rally? It appears to be concerns over the global economy with oil prices as a strong base. There is good news in this and also some caution. The caution is the fact that whenever we see a significant and rapid improvement in bond yields and mortgage rates like the current, they often unwind or reverse extremely fast when the cause of the rally eases. The good news is that while a partial reversal or profit-taking move is still expected, the reason for this particular bond rally may not go away anytime soon. In other words, while we should be expecting a bounce of some type in bond yields (and rates), we still should see the 10-year Treasury Note yield remain below 2.00% for the immediate future. Since mortgage rates tend to track bond yields, this should bode well for mortgage shoppers. I remain cautious towards floating a rate at the present moment though simply because profit-taking should be kicking in soon that could cause a bump in rates. Remaining cautious until the bond market stabilizes would be prudent.

Today’s only economic data was last week’s unemployment figures at 8:30 AM ET. They showed that 269,000 new claims for unemployment benefits were filed last week, down from the previous week’s total of 285,000 initial claims. Declining claims is actually a bad sign for bonds and mortgage rates because it points towards a strengthening employment sector. Fortunately though, this is just a weekly report that has not had much of an impact on today’s trading.

Day two of the Fed’s congressional testimony hasn’t brought any surprises that are worth mentioning. Chair Yellen is speaking to the senate Banking Committee today after yesterday’s House Financial Services committee appearance. If we get a surprise comment it will come during the Q&A portion of the proceeding, but I don’t believe this event will affect mortgage rates any further.

Both of this week’s monthly economic reports will be released tomorrow morning. The first is one of the more important ones we get each month. The Commerce Department will post January’s Retail Sales data at 8:30 AM ET. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched quite closely. If Friday’s report reveals weaker than expected retail-level sales, the bond market should thrive and mortgage rates will fall since it would be a sign that the economy is not as strong as many had thought. However, a stronger reading than the 0.2% increase that is expected could lead to higher mortgage rates.

February’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment will be released just before 10:00 AM tomorrow. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to come in at 92.7, down from January’s final reading of 93.3. That would indicate consumers were a little less optimistic about their own financial situations than last month and are less likely to make large a purchase in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, this would be considered slightly positive news for bonds and mortgage pricing. Ideally, we would prefer to see a large decline in confidence.