Retail sales fell 0.4% in April, baffling the significant number of economist who had been expecting April retail sales to make a much better showing. The 0.4% drop in the headline number followed a revised 1.3% drop in March that was also weaker-than-expected. Stripping out the volatile auto sales component did not help the numbers look any better. Even reduced to this base level, retail sales fell 0.5% last month. The "so what" factor attached to this morning's April retail sales report is that all investors were given a big reminder that the economy is staggering along a rocky, uneven road to recovery. In a separate report the Mortgage Bankers of America said application demand slipped to its lowest level since mid-March during the week-ended April 9th, driven by a drop in requests to refinance loans. The MBA's overall application index dropped by 8.6% compared to the previous week level. Refinance applications fell 11.2% -- while the component of the index that measures purchase loan requests posted a modest 0.5% improvement. Last but certainly not lest, selling pressure in the stock market is contributing to solid improvements in the mortgage market in today's early going. An increasing number of analysts are warning the rally in stock prices that began in early March is overdue for a correction to the downside. Should these forecasts prove accurate; a meaningful sell-off in the stock markets will almost certainly support the prospects for steady to perhaps fractionally lower mortgage interest rates.
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