There are five relevant monthly and quarterly economic reports scheduled this week that have the potential to affect mortgage pricing, along with two Treasury auctions, more corporate earnings news and the first FOMC meeting of the year. One of the reports is considered to be highly important while others are of moderate or low importance. It is also worth noting that this weekend's Minnesota/ICE headlines may contribute to another partial government shutdown at midnight Friday because several Senate Democrats have now said they will not vote for parts of the funding package that the House of Representatives previously approved. With so much happening this week, it is safe to say we can expect plenty of volatility in the markets and movement in mortgage rates.

Beginning this week’s activities is the release of the Durable Goods Orders report for November at 8:30 AM ET. This is another report that was delayed by last year’s government shutdown, meaning the data is now aged. Durable goods are costly products that are expected to last three or more years, such as airplanes, appliances and electronics. The data is known to be quite volatile from month-to-month, so a large headline number isn't necessarily a concern. Forecasts are calling for an increase in news orders, signaling strength in the manufacturing sector towards the end of last year, after the previous update showed a 2.2% decline. Even though this is traditionally considered to be an important report, a slight variance likely will have little impact on tomorrow’s mortgage pricing because of the large swings that are common in the data and the age of this release. A large decline would be good news for mortgage rates.

January's Consumer Confidence Index (CCI) is set to be posted by the Conference Board at 10:00 AM ET Tuesday. The CCI is an indicator of consumer sentiment about their own financial conditions, which is important because waning confidence is a sign that consumers are less willing to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy and bonds tend to thrive in weaker economic conditions, bond traders are very attentive to related data. Analysts are expecting to see an increase from December's 89.1 reading, indicating consumers are more likely to spend this month than last month. Good news for rates would be a decline in confidence.

Also Tuesday will be the first of the two Treasury auctions that have the potential to affect mortgage rates this week. 5-year Notes will be sold Tuesday while 7-year Notes will go Thursday. A strong demand from investors may lead to bonds gains and a small downward revision to mortgage rates after results are announced at 1:00 PM ET those days. On the other hand, a weak interest in the securities could cause a slight increase in rates.

There is no relevant economic data set for release Wednesday. However, the year's first FOMC meeting will begin Tuesday and adjourn Wednesday afternoon. The consensus is that Fed Chairman Powell and friends will leave key short-term interest rates unchanged at this meeting after making cuts during the past three meetings. Traders will be looking at the post-meeting statement for hints about when they will make their next move. An indication of another rate cut coming sooner than later should draw a positive reaction in the bond market and lead to lower mortgage rates Wednesday afternoon. The 2:00 PM ET meeting adjournment and statement release will be followed by a press conference with Chairman Powell at 2:30 PM ET. This meeting does not include revised economic projections.

Thursday just has a couple of reports that are considered moderately important at best. The day will start with the weekly unemployment update that tells us the number of new claims made for jobless benefits at 8:30 AM ET. Revised worker productivity numbers for the 3rd quarter will also be posted early Thursday morning. It likely will have no impact on the markets because it covers the July through September months and is simply a revision to a previous estimate.

November’s Factory Orders report is set to be released at 10:00 AM ET Thursday. This report normally is considered to be moderately important, but as a shutdown-delayed release, the age of it should lessen its influence on the markets. Analysts are expecting it to show a rebound in orders for durable and non-durable goods after October’s update showed a 1.3% decline. Good news for rates, albeit any impact should be barely noticeable, would be another decline.

This week’s most important piece of data will come early Friday morning when December’s Producer Price Index (PPI) is released. It will give us some insight into inflationary pressures at the wholesale level of the economy. The threat of rising inflation is the primary reason the Fed is hesitant to make further cuts to key short-term interest rates. Predictions have the overall PPI rising 0.2% and the more important core reading that excludes volatile food and energy costs up 0.3%. On an annual basis, both are expected to be at a 3.0% pace. Smaller than expected increases would be very good news for long-term securities such as mortgage-related bonds, leading to lower rates Friday morning.

Corporate earnings may still come into play this week. Big-named companies such as Apple, Meta (Facebook), Microsoft and Tesla are all expected to post earnings this week along with many others. Generally speaking, disappointing earnings traditionally hurt stocks and may lead to lower mortgage rates as investors move funds into bonds. However, the week's late economic data and FOMC meeting will be much more of a driving factor for mortgage rates than earnings news.

Overall, Wednesday is the key day of the week for rates due to the FOMC meeting, but we may see a big move if Friday’s inflation data shows a surprise. Thursday is a good candidate for calmest day as long as the FOMC meeting doesn’t cause a significant reaction in the markets that would carry into Thursday’s session. The possible government shutdown is more likely to be an issue later in the week than earlier, if there is a response in the markets at all. Due to the elevated possibility of seeing multiple days with a noticeable change in rates, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock 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.