Mel's Blog

Monday's bond market has opened well in positive territory due early selling in stocks. The stock markets are posting significant losses with the Dow down 106 points and the Nasdaq down 7 points. The bond market is currently up 18/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.

There is no relevant economic news scheduled for release today. The first data of the week is March's Goods and Services Trade Balance report early tomorrow morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is the least important of this week's data.

The first important piece of data is the release of April's Retail Sales early Wednesday morning. This is an extremely important report for the financial markets as it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.1% decline in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower Wednesday. However, a larger increase could fuel bond selling and lead to higher mortgage rates.

Overall, it likely will be a pretty active week for mortgage rates. Besides the week's important economic news, look for the stock markets to be a major influence on trading. The most important day of the week is Friday with three reports on the agenda, including the CPI. But Wednesday is also important due to the Retail Sales report. I am expecting to see several noticeable changes to rates this week, and would not be surprised to see multiple intra-day revisions also. Accordingly, please be attentive to the markets if still floating an interest rate.

                   Mel