Updated on October 15, 2021 10:02:22 AM EDT
Today’s big news was September’s Retail Sales data at 8:30 AM ET. The Commerce Department announced a 0.7% increase in consumer spending, greatly exceeding forecasts of a 0.2% decline. A secondary reading that tracks sales but excludes more costly and volatile auto transactions jumped 0.8% when it was expected to rise only 0.4%. Both readings indicate consumers spent much more last month than many had thought. Because consumer spending makes up over two-thirds of the U.S. economy, this is a sign of economic strength that makes the data very bad news for bonds and mortgage rates.
The University of Michigan released their Index of Consumer Sentiment for October late this morning. It came in at 71.4, down from September’s 72.8. Forecasts were calling for an increase in sentiment that would have meant surveyed consumers felt better about their own financial situations than they did last month. The decline is a sign that consumers are not as likely to spend money as they were last month, helping to limit economic growth. Therefore, we can consider the index good news for rates. Unfortunately, traders are more focused on the sales data, preventing this index from having a favorable impact on bonds and mortgage rates.
Next week has a handful of moderately important economic releases, starting with Industrial Production data Monday morning. The general theme of the week will be housing with several reports giving us an indication of strength in that sector. None of the releases are considered to be key or expected to have a significant influence on the markets. In addition to the data, there also is another Treasury auction and the Fed Beige Book for the markets to watch. Look for details on all of next week’s activities in Sunday evening’s weekly preview.
©Mortgage Commentary 2021