The second half of this week has an eventful economic calendar, with economic reports that could wreak mischief with mortgage rates. Don't be surprised if you see noticeable swings -- up or down -- on Friday.
I'll start with Friday and work backward, because Friday's report on consumer prices has the most capability of affecting mortgage rates. According to Briefing.com, the consensus is that the core Consumer Price Index for June will measure 0.1 percent. The core CPI measures retail inflation, excluding food and fuel.
Let's back up a bit and look at the June jobs report, issued July 2. It said that the economy shed 125,000 jobs in June. For the people who managed to keep their jobs, average income fell about $3 per week. With jobs disappearing and wages falling, there's not enough money in the system to cause inflation.
Two paragraphs ago, I wrote that Briefing.com says the consensus is that inflation was 0.1 percent in June. That's the consensus among people who Briefing.com polls. Briefing.com's own economists are more bearish. They think the report will say core prices were flat, and that the overall CPI will be down 0.2 percent.
If Briefing.com is right, then the CPI report will exert no upward pressure on mortgage rates. Might a report of negative CPI -- in other words, price deflation -- cause mortgage rates to fall further? I doubt it, because I think our current five-week slide in mortgage rates has more to do with European debt worries than anything else.
OK, more about this week's economic calendar. Thursday brings us a big buffet of economic news from June, including wholesale prices (the Producer Price Index) and industrial production and capacity utilization. That last one measures how much of our potential national output is being used. For example, if a factory could produce 100 widgets an hour at full capacity, but today is making 74 widgets an hour, its capacity utilization is 74 percent. That's about where it was in May, and where it's expected to remain in June.
Wednesday morning brings the report on June retail sales, and at 2 p.m. Eastern on Wednesday we get the minutes of the latest Fed meeting. That one could cause a blip in mortgage rates.