Monday’s bond market has opened in positive territory with stocks starting the week in negative ground. The Dow is currently down 61 points while the Nasdaq has lost 13 points. The bond market is currently up 6/32 (2.16%), which should improve this morning’s mortgage rates by approximately .125 of a discount point if comparing to Friday’s morning pricing.
There is no relevant economic data set for release today, but this is the only day of the week that we don’t have something scheduled. The rest of the week brings us the release of five economic reports that have the potential to affect mortgage rates in addition to a day of FOMC events that are highly relevant. A couple of items on this week’s calendar are considered to be highly important to the financial and mortgage markets, meaning there is a high probability of seeing significant changes to rates this week.
The highly important Retail Sales report will kick off the week’s calendar at 8:30 AM tomorrow. This Commerce Department report will give us a very important measurement of consumer spending that is extremely relevant to the markets because it makes up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.3% increase in sales. Analysts are also calling for a 0.2% rise in sales if more volatile auto transactions are excluded. Larger than expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate economic growth.
August’s Industrial Production data will be posted at 9:15 AM ET tomorrow. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important but could help change mortgage rates if there is a significant difference between forecasts and the actual reading. Analysts are expecting to see a 0.2% decline from July’s level of output. A sizable increase could lead to slightly higher mortgage rates, while a weaker than expected figure would indicate a softer than thought manufacturing sector and would be considered good news for bonds and mortgage rates. However, the Retail Sales report will draw much more attention than this report.
Overall, there is little doubt that this is going to be an active week for the financial and mortgage markets. Thursday is the key day due to the FOMC meeting, projections and press conference. Tomorrow and Wednesday morning’s data is very important to bonds and Thursday’s afternoon trading could carry into Friday morning also. In other words, expect to see the most movement in mortgage pricing the middle days of the week. I would not be surprised to see a significant move in bond prices and mortgage rates this week, so it is strongly recommended to maintain contact with your mortgage professional if still floating an interest rate and closing any time in the near future.