Mortgage rates held their ground as stocks showed weakness on poor earnings, consumer sentiment weakened, and the prospect of continued inflation garnernered national and international headlines. Last week is a fairly textbook example of how bad news for the economy can work to the benefit of rates as they finished the week unchanged to very slightly improved.
Markets will focus on two key measures if inflation: The Producer Price Index, and Consumer Price Index, which will be released at 8:30a on Tuesday and Wednesday respectively. With two Fed members on the record last we as recommending a very cautious strance on inflation, these figures will get extra attention. Any spike in inflation may cause mortgage rates to worsen.
The full economic calendar presents some other data worth watching this week: Retail Sales, Housing Starts and Permits, and Friday’s Philadelphia Fed Index will provide some insight on the state of the economy – significant weakness in any of these figures may benefit mortgage rates, while stronger than expected figures may cause them to drift higher.