Mortgage bond prices finished the week a little lower which put upward pressure on rates. Rates improved significantly the first portion of the week as the Fed continued their multi-billion-dollar daily MBS purchases. Unfortunately, weakness Wednesday and Friday erased the improvements and more. The data was mixed. Consumer prices rose 0.4% as expected and the core rose 0.1% vs 0.2%. Weekly jobless claims were 712K vs the expected 715K. Producer prices rose 0.5% and the core rose 0.2%. Both figures were in line with estimates. Congress and the U.S. Administration passed a $1.9 trillion dollar stimulus bill Thursday. While most analysts revised economic projections following the passage, they also increased their inflation expectations. Mortgage interest rates finished the week worse by approximately 1/8 to 1/4 of a discount point.

Looking Ahead
Economic IndicatorRelease Date & TimeConsensus EstimateAnalysis
Retail SalesTuesday, March 16,
8:30 am, et
Down 0.4%Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Industrial ProductionTuesday, March 16,
9:15 am, et
Up 0.4%Important. A measure of manufacturing sector strength. A lower-than-expected increase may lead to lower rates.
Capacity UtilizationTuesday, March 16,
9:15 am, et
75.7%Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
NAHB Housing IndexTuesday, March 16,
10:00 am, et
83Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
Housing StartsWednesday, March 17,
8:30 am, et
1.54MImportant. A measure of housing sector strength. Weakness may lead to lower rates.
Fed Meeting AdjournsWednesday, March 17,
2:15 pm, et
No rate changesImportant. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless ClaimsThursday, March 18,
8:30 am, et
745KImportant. An indication of employment. Higher claims may result in lower rates.
Philadelphia Fed SurveyThursday, March 18,
10:00 am, et
22.4Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Leading Economic IndicatorsThursday, March 18,
10:00 am, et
Up 0.3%Important. An indication of future economic activity. A smaller increase may lead to lower rates.

Debt & Deficit

The Federal budget deficit is the difference between what the US Government spends each year and what they bring in. The national debt is the total of all unpaid obligations borrowed by the US Government. The Congressional Budget Office projects the federal budget deficit to be $2.3 trillion in 2021, nearly $900 billion less than the shortfall recorded in 2020. Current US national debt exceeds $27T. The CBO “now projects stronger economic activity, higher inflation, and higher interest rates, boosting both revenues and outlays—the former more than the latter.” If their inflation projection is accurate, we could see upward pressure on mortgage interest rates. A cautious approach to float/lock decisions is prudent.