While the economic news a couple of weeks ago was packed with highly anticipated central bank announcements and significant economic data, there was no major economic news last week. As a result, both mortgage rates and the stock market ended the week with little change.
The pace of global economic growth is one primary influence for mortgage rates right now. Slower growth in the US, Europe, China, and most other regions has reduced inflationary pressures and supported low mortgage rates. The prior week’s stronger than expected Employment report and improving housing sector data, however, has raised hopes that the US will lead the rest of the world back to at least average levels of economic growth. A full slate of economic reports this week will help investors determine if the trend will continue.
While there were few notable headlines last week, news in Europe will continue to impact US mortgage rates in coming months. Weaker European countries are seeking quick relief for their debt troubles, which are close to unsustainable levels. The stronger countries such as Germany, though, are reluctant to pay the price for aid without guarantees about longer term reforms and greater central authority. It’s still not certain that the European Union (EU) will remain intact. Both scheduled events and unexpected news almost certainly will have a significant effect on US financial markets for quite a while.
The most significant economic data this week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of “intermediate” goods used by companies to produce finished products and will come out on Tuesday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Wednesday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Tuesday. Retail Sales account for about 70% of economic activity. Industrial Production will come out on Wednesday. Housing Starts will be released on Thursday. Consumer Sentiment, Leading Indicators, Philly Fed, and Empire State will round out a busy schedule.
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