This Week's Financial Data And Effect On Mortgage Rates

Last week, despite the lack of economy data that could have affected the mortgage rates, two were powerful enough. First an analyst said that banking-sector optimism may be premature. This was enough to bring the mortgage rates down significantly to end the week lower than it started.

The second was the Wells Fargo's stunning earnings that it expects to have a profit of 3 billion dollars in the first quarter of 2009. This, probably is because of the all time low mortgage rates that have given people new impulse to buy a house or to refinance their existing mortgage. However, I would like to know how much of it is the TARP money that Wells Fargo got from the government. In any case the mortgage rates started to move slightly up after Well's Fargo announcement. The also moved up the entire financial sector.

Now this week there are three tips of important data that promises to move the mortgage rates.

1. Retail Sales
2. Consumer Price Index
3. Housing Starts
4. Financial Firm Earnings Reports

Retail sales are important because the spending by the consumers constitutes 2/3 of the economy. If the report is lower than expected that would ruin the optimism and will tell us that we should not be very optimistic yet. That in turn may bring the mortgage rates down or keep at the existing level.

Then, on Wednesday the government will release the Consumer Price Index, which measures the cost of living. Because this is closely related to inflation, if the CPI is higher it may push the mortgage rates high as well.

Housing start is very interesting. It kind of has twofold effect. You would think that higher numbers are good and lower numbers are bad, but not quite. Higher numbers of housing starts are indeed good, but if the number is lower than expected it may mean that the pressure is being taken off of the existing homes freeing the inventory. In any case it will be a good measurement of the state of the economy in the housing sector.

Tomorrow also starts first quarter earnings report by the three of the nation's largest financial firms: Goldman Sachs, JPMorgan Chase, and Citigroup If the filings show strength like Wells Fargo's did, expect mortgage rates to rise like that did after the Wells Fargo report. What's good for stocks right now may prove to be bad for mortgage rates. Goldman Sachs reports on Tuesday, JPMorgan Chase on Thursday and Citigroup on Friday.