Monday’s bond market has opened the week in negative territory following unfavorable economic news. The stock markets are mixed with the Dow down 33 points and the Nasdaq up 1 point. The bond market is currently down 7/32, which will likely push this morning’s mortgage rates higher by approximately .250 – .375 of a discount point if comparing to Friday’s morning pricing.
The Commerce Department gave us this morning’s only relevant economic data, but it was one of the more important reports we see each month. At 8:30 AM ET, they announced that April’s retail level sales rose 0.1% when analysts were expecting to see a 0.3% decline. A secondary reading that excludes more volatile auto sales also showed stronger than forecasted sales (-0.1% vs -0.2%). These readings indicate that consumers spent more last month than many had thought, making them bad news for the bond market and mortgage rates since they indicate higher levels of economic activity.
Tomorrow is the only day that has nothing of importance scheduled for release, but the rest of the week brings us six more economic reports that may have the potential to influence mortgage rates. Those reports include two key inflation readings the middle part of the week that are highly important to the bond market. We saw plenty of movement in rates last week despite the lack of factual economic reports. Unfortunately for mortgage shoppers, they moved higher and this week may not be any different unless the data shows much weaker than thought economic activity. Therefore, please proceed cautiously as this could be another ugly week for rates if the data gives us stronger than expected results.
Overall, it is likely going to be an active week for the financial and mortgage markets. Today or Thursday will probably end up being the most important day for mortgage rates, but we could see noticeable movement in rates multiple days this week. The lightest day will likely be tomorrow unless it is an overly volatile day for stocks. Accordingly, I strongly recommend vigilant tracking of interest rates for loans still floating which are closing in the near future.