Weaker than expected economic data was modestly positive for mortgage rates this week. Headlines about the trade negotiations between the U.S. and China caused some volatility but had little net effect. The latest figures released this week on retail sales for April were a good deal weaker than expected with a small decline from March. Excluding the volatile auto component, the shortfall compared to the consensus was even greater. Since slower economic growth reduces the outlook for future inflation, this data was favorable for mortgage rates.
The data from the housing sector was more encouraging. In April, housing starts rose 6% from March, which was well above the expected levels. Both single-family and multi-family units posted solid gains. Since sales activity in many regions has been constrained by a lack of inventory, this was welcome news for the housing market.
Looking ahead, Existing Home Sales will be released on Tuesday and New Home Sales on Thursday. The minutes from the May 1 Fed meeting will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials about future monetary policy and have the potential to move markets. Durable Orders, an important indicator of economic growth, will come out on Friday. In addition, news about the status of the trade negotiations between the U.S. and China could influence mortgage rates.
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