The economic calendar has a slow start this week, after enduring Friday's disappointing employment report.
In that report, nonfarm payrolls plunged by 131,000 jobs in July, which was worse than expected. The revision for June magnified that month's job losses, too. With all those lost jobs, the unemployment rate remained unchanged, at 9.5 percent. Was that a sliver of good news? No. It was a sign that discouraged jobless people haven't resumed dormant job searches.
This week, the first item of note on the economic calendar comes Tuesday morning, with the numbers on productivity and labor costs. They won't have any effect on mortgage rates, but might give us another hint about the direction of the economy. An increase in productivity could mean that further hiring is in the offing, as businesses strain their workforces.
At 2:15 p.m. Tuesday eastern time, the Federal Reserve announces its latest policy on interest rates. They won't raise the federal funds rate. They might announce some sort of innovative project to prime the economy's pump, since Congress isn't up to that task.
Some folks have speculated that the Fed might announce a resumption of mortgage bond purchases, but that wouldn't accomplish much. For more than a year, the Fed bought mortgage-backed securities to raise their prices (and, therefore, to depress rates). The plan worked. Then the Fed stopped buying mortgage bonds at the end of April. And guess what? Mortgage bond prices rose even more, and mortgage rates fell even more.
Given the current level of mortgage bond prices, mortgage rates could (should?) be even lower. Banks are profiting off the difference between what mortgage rates are and what they would be in a more competitive market. You could quibble about the anti-competitive nature of this, but the Fed and other regulators don't mind, because they want banks to be more profitable so they can mend their balance sheets.
What do I mean about the anti-competitive mortgage market? The top two lenders, Wells Fargo and Bank of America, undewrote 46 percent of mortgages in the first quarter, according to mortgagestats.com. Chase had another 10 percent. So three companies control 56 percent of the mortgage market.
Nothing much happens on Wednesday's and Thursday's economic calendar. Friday morning, we get the consumer price index for July. According to Briefing.com, the consensus prediction is that overall retail inflation was up 0.2 percent, and core retail prices (everything except food and energy) rose 0.1 percent.
If core prices are higher than that, you might see an upward bump in mortgage rates. If core prices are flat, or if they fell, I doubt mortgage rates would fall in response.