This Week's Economis News

This week brings us the release of only two pieces of economic news in addition to the minutes from the last FOMC meeting. Neither of the economic reports can be considered of high importance to the markets and mortgage rates, so we may see a fairly calm week for mortgage rates.

April's Housing Starts is the first data of the week but is the less important of the two. This data measures housing sector strength and mortgage credit demand by tracking new permits and actual starts of new home construction. It is expected to show a small increase in new starts from March's readings. But, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.

There is no relevant economic news scheduled for release Wednesday, but we will get to see the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy. The goal is to form a guess about when the Fed may make another move to help the economy. The minutes will be released at 2:00 PM ET, so if there is a market reaction to them it will be evident during afternoon trading.

The last data comes late Thursday morning with the release of April's Leading Economic Indicators (LEI) at 10:00 AM ET. This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show a fairly large increase of 0.7% from March's reading, meaning that economic activity is likely to gain momentum during the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher Thursday.

Overall, I think it will be a fairly calm week for mortgage rates, at least compared to last week. We could see little movement in rates if the stock markets remain calm and the week's data doesn't reveal any major surprises. The FOMC minutes may lead to some volatility in the markets, but neither of the economic reports are of great concern.

Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday Monday. These early closes sometimes lead to additional volatility in bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.