Despite the dearth of economic news last week, mortgage rates staged somewhat of a rally. By the time the week ended. mortgage rates had retreated by half of the prior week’s major run-up. The week was not without fireworks, however. In prepared remarks, Dallas Fed President Fisher dropped a hint about future Fed rate hikes and that was enough to put markets on watch. In response, there was a late-Friday run-up and mortgage rates entered the weekend on an upward tick.
This week brings a host of data to digest including Retail Sales (Tuesday), PPI (Friday) and Housing Starts (Friday). Taken individually, these are powerful pieces of data, but this week, all three will take a backseat to Federal Reserve Chairman Ben Bernanke’s semi-annual testimony to the Senate Banking Committee scheduled for Wednesday.
Bernanke’s speech will not be sugar-coated and market participants will dissect his every word for clues about the economy. If markets perceive weakness in Big Ben’s words, expect mortgage rates to fall. If markets perceive strength, expect mortgage rates to rise.