Updated on October 18, 2021 10:04:37 AM EDT
Septembers Industrial Production data was posted at 9:15 AM ET, revealing a 1.3% decline in output at U.S. factories, mines and utilities. This was much weaker than forecasts, showing a sign of manufacturing weakness. While this is good news for bonds and mortgage rates, it isn’t important enough to offset the negative tone from overnight trading overseas.
The rest of the week brings us four more monthly economic reports that the markets will be watching. There is also a Treasury auction that has the potential to slightly affect rates and corporate earnings season kicks off this week. None of the week’s activities can be considered major or significant, but most of what is scheduled carries enough importance to cause minor or moderate changes in mortgage pricing.
Tomorrow has a single release with Septembers Housing Starts set to be posted at 8:30 AM ET. This Commerce Department report will probably not have a heavy impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand by tracking construction starts of new homes but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a small increase in new home starts between August and September, pointing to strength in the new home portion of the housing sector. We need to see a significant surprise in this data for it to have a noticeable influence on mortgage rates.
Also worth noting is corporate earnings season gets into full swing this week. This is when a large number of big-named companies release their quarterly and annual earnings reports. Strong earnings are good news for stocks and bad news for bonds. Generally speaking, if earnings miss expectations, bonds should rally and mortgage rates should move lower. With plenty of them posting this week, stocks could have a heavy influence on bond trading and mortgage pricing.
Overall, no day stands out as a clear choice for most important of the week. Thursday is a possibility with two monthly releases and the weekly unemployment update all scheduled, but Wednesday afternoon could see some movement also. Friday is a decent candidate for calmest day for rates. Despite the lack of any key economic data being posted, there still are plenty of events scheduled during the week, meaning we could still see multiple days with a noticeable change in mortgage pricing.
©Mortgage Commentary 2021