Monday, May 17, 2021


Updated on May 14, 2021 10:03:25 AM EDT

This morning’s big economic release was April’s Retail Sales report that showed no change between March and April. That is very good news for bonds and mortgage rates because analysts were expecting to see an increase in sales of nearly 1.0%. Even a secondary reading that excludes more costly and volatile auto sales declined 0.8% when it was forecasted to rise 0.8%. Both readings indicate consumers spent much less than thought last month. Since consumer spending makes up over two-thirds of the U.S. economy, weaker levels of spending are a sign of slower economic growth. Therefore, we can consider the data extremely favorable for bonds and mortgage rates.

Aprils Industrial Production report was released at 9:15 AM ET, revealing a 0.7% increase in output at U.S. factories, mines and utilities. This was a little weaker than forecasts, but still in the range of predictions. We are labeling this report as neutral for bonds and mortgage rates.

The final report of the week was Mays preliminary reading to the University of Michigans Index of Consumer Sentiment at 10:00 AM ET. It came in at 82.8, falling well short of the 90.2 that was expected and down from April’s final 88.3. The softer reading means surveyed consumers felt worse about their own financial situations than they did last month. This is good news for rates because waning confidence usually translates into weaker consumer spending, restricting economic growth.

Next week is much lighter than this week was in terms of scheduled events that may influence rates. Most notable are a couple of housing-related economic releases, a Treasury auction and the minutes from the most recent FOMC meeting. None of the activities on next week’s calendar are expected to be market movers or cause a significant change in mortgage pricing. Look for details on all of next week’s events in Sunday evening’s weekly preview.

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