This week brings us the release of five pieces of economic data, with four of them likely to affect mortgage rates. The most important reports are spread over only two days, so look for the biggest changes to rates the latter part of the week.

The first report of the week is not considered to be of high importance. July’s Goods and Services Trade Balan ce data will be posted Tuesday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $65.5 billion, which would be a small increase from June’s $64.8 billion. However, I would consider this the least important of this week’s releases, meaning it will likely have little impact on bond trading or mortgage rates.

Worth noting though is the 10-year Treasury note auction Tuesday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. But, if the sales are met with a decent demand from investors, those losses are normally recovered after the results are announced. The results will be posted at 1:00 pm ET Tuesday. If demand was strong, particularly from international investors, we should see mortgage rates improve Tuesday afternoon.

The next piece of data comes Thursday morning with the release of August’s Retail Sales report. It will give us a measurement of consumer spending, which is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Current forecasts call for a 0.1% decline in sales last month after July’s 1.4% jump. If we see a higher level of spending than is forecasted, the bond markets will most likely fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Thursday.

The remaining three reports are all scheduled to be released Friday morning. The first is August’s Consumer Price Index (CPI) at 8:30 am ET. The CPI is one of the most important reports we see each and every month. It is considered to be a key indicator of inflation at the consumer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. Current forecasts are calling for inc reases of 0.2% in the overall index and in the core data reading. A larger increase in the core data would likely lead to higher mortgage rates Friday.

The second report of the day is August’s Industrial Production report. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is not as important as the CPI report, but is also likely to cause movement in mortgage rates. Analysts are currently expecting to see a 0.2% increase in production. A higher level of output could lead to higher mortgage rates, while a weaker than expected figure should help push rates lower.

The last report of the week comes from the University of Michigan. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers’ willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned o f their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can impact the financial markets. If the index falls below the estimate of 83.5, we should see mortgage rates improve Friday morning, assuming that the CPI doesn’t reveal a negative surprise.

Overall, this will likely be a pretty active week for the bond market and mortgage rates. Friday’s CPI is the week’s single most important report, but Thursday’s Retail Sales data may also cause significant movement in mortgage rates. If we see weaker than expected readings in those three reports, we should see mortgage rates move significantly lower for the week. However, stronger than expected readings would likely drive bond prices lower and mortgage rates higher. I am holding the float recommendations for now, but could change is there is a lackluster interest in the 10-year auction or if the two key reports show stronger than expected results.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float if my closing was taking place between 8 and 20 days… Float if my closing was taking place between 21 and 60 days… Float if my closing was taking place over 60 days from now… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

a la mode