Overview: Over the past week, it was a very light period for economic news in the U.S., while a modest improvement in global economic data caused investors to raise their growth outlook. As a result, rates ended the week higher.
Each month, the National Association of Home Builders (NAHB) publishes a survey of home builder confidence. After reaching 68 last October, the index dropped sharply during the fourth quarter of 2018, but it has partly bounced back this year to a level of 63 in April. Readings above 50 indicate positive sentiment. While this is favorable news, builders point to a lack of skilled workers and available lots as constraints to even greater confidence and a faster pace of construction.
In June 2016, voters narrowly passed a referendum for a British exit (Brexit) from the European Union. The big-picture benefits cited by supporters such as greater sovereignty over national decisions were relatively clear, but the tricky part was working out the details in key areas such as trade and immigration. Nearly three years later, UK lawmakers still have been unable to agree to the terms of the separation. The originally scheduled departure date of March 29 was missed, and EU leaders just agreed to postpone Brexit until October 31. This means that the damage to the UK economy from the uncertainty will continue, as individuals and businesses will remain reluctant to make long-term commitments.
Week Ahead
Looking ahead, the Retail Sales report will be released on Thursday. Since consumer spending accounts for about 70% of all economic activity in the U.S., the retail sales data is a key indicator of growth. The New Residential Construction report (also known as Housing Starts) will come out on Friday. The Existing Home Sales report will be released on April 22, followed by New Home Sales on April 23. In addition, news about trade negotiations between the U.S. and China could affect mortgage rates. Mortgage markets will close early at 2:00 p.m. EDT on Thursday and will be closed on Friday in observance of Good Friday.