Through 5 days of see-saw trading, mortgage rates ended last week relatively flat; the downward tick into Friday's close was a boon for home buyers this past weekend. It may be short-lived, however.
Oil continues to sit near all-time highs and a slew of inflation-related data is crossing the wires this week.
When inflation pressures are high, mortgage rates rise.
The first piece of data is Retail Sales for March and it hits Monday at 8:30 A.M. ET.
Traders pay close attention to Retail Sales because consumer spending accounts for two-thirds of the economy. If sales growth is negative, it's unlikely that Americans will spend the economy out of its weakness.
That should bode well for mortgage rates because a sluggish economy can combat some forms of inflation.
Next, on Tuesday, markets will see the Producer Price Index from March and, on Wednesday, it will see the Consumer Price Index from March. These are "Cost of Living" measurements for businesses and consumers, respectively.
Over the past few months, rising energy costs have pushed both indices to record levels, taxing Americans on all fronts. Rising costs are the heart of inflation and this tends to push mortgage rates higher.
Another "hot" number this month will be bad for mortgage rate shoppers.
Also impacting mortgage markets this week will be the earnings reports of key financial companies including Washington Mutual, JPMorgan Chase, Wells Fargo, Citigroup, and Wachovia. This list is a Who's Who of mortgage-exposed banks and dramatic weakness will force investors to sell stocks in favor of bonds.
Because mortgage rates are based on the price of mortgage bonds, this sort of "safe haven" buying would lower rates.
Mortgage markets have been manic since the start of the year and there's no reason to expect a reprieve this week. It's data-heavy so if you see a rate you like, lock it before it's gone.
