Market Update for the week of April 13th

This week brings us the release of seven relevant economic reports for the bond market to digest. We are also heading into corporate earnings season which could lead to fluctuations in the stock markets. If earnings come in lighter than estimates, the stock markets may fall, leading to an influx of funds into bonds. But, if earnings and forecasts are strong, the major stock indexes may rally, pulling funds from bonds and leading to higher mortgage rates. Some of the most influential companies don't report quarterly earnings for a few more weeks, but the early releases could affect optimism about what those big named companies' earnings will show.

The first important report comes early tomorrow morning when the Commerce Department will release March's Retail Sales data. This piece of data gives us a measurement of consumer spending, which is very important because consumer spending makes up two-thirds of the U.S. economy. Current forecasts call for a 0.1% incr ease in sales last month. If we see a larger increase in spending, the bond market will probably fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower tomorrow.

The Labor Department will post March's Producer Price Index (PPI) early Tuesday morning, giving us an important measurement of inflationary pressures at the producer level of the economy. 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. If it shows rapidly rising prices, inflation fears may hurt bond prices, leading to higher mortgage rates Tuesday morning. However, a small increase, or better yet a decline in prices, would be good news for the bond market and mortgage rates. Current forecasts are calling for a 0.4% increase in the overall reading and a 0.2% rise in the core data

There are four pieces of news scheduled for release Wednesday. The first is the sister report of the PPI. March's Consumer Price Index (CPI) will be released early Wednesday morning. This index is very similar to Tuesday's PPI, but tracks prices at the more important consumer level of the economy. This is one of the most important pieces of data we see each month, so stronger than expected readings will undoubtedly lead to higher mortgage rates. Current forecasts are calling for an increase of 0.3% in the overall index and 0.2% in the core data.

March's Housing Starts report is the second report to be posted Wednesday morning, but it will most likely be a non-factor in the market. It gives us a measurement of housing sector strength and mortgage credit demand, however, usually doesn't cause much movement in mortgage pricing unless it varies greatly from forecasts. It is this week's least important report.

The third is March's Industrial Production report at 9:15 AM ET. It gives us a measurement of output at U.S. factories, mines and utilities, translating into an indication of manufacturing sector strength. Current forecasts are calling for a decline in production of 0.1%. Since signs of a weakening economy are considered favorable to bonds and therefore mortgage rates, a larger decline would be good news for mortgage pricing. However, the CPI is by far the most important data of the day.

The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET Wednesday. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises.

Thursday's sole monthly report is the Conference B oard's Leading Economic Indicators (LEI). This data attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market may fall and mortgage rates could rise. If it shows weaker than expected readings, the bond market may rally and mortgage rates should move lower. This is considered to be a moderately important report, so we may see some movement in rates as a result of this report. It is expected to show an increase of 0.1%.

Overall, look for the most movement in rates early in the week. The Retail Sales, PPI and CPI reports are the biggest names on the agenda. Any of the three can cause significant movement in the markets and mortgage rates, so please proceed cautiously if still floating an interest rate.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float i f my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.