Week Of: 04/27/2026

 04-24-26 10:30am News about negotiations to end the conflict in the Middle East caused volatility for mortgage markets this week. The most significant economic report revealed stronger than expected consumer spending, but its impact was minor. Mortgage rates ended the week a little higher.

Consumer spending accounts for over two-thirds of U.S. economic activity, so the monthly Retail Sales report is a key measure of the health of the economy. While economists had anticipated that larger than usual tax refunds would provide extra ammunition, they also had to factor in that the enormous rise in gas prices in March might sap some of that strength. As a result, the consensus forecasts spanned a wide range for this report.

The actual result was a nice surprise to the upside. Retail sales in March surged 1.7% from February, above the consensus forecast of 1.4% and the largest monthly increase in a year. Even excluding the record rise in sales of gas (which are measured by dollar value), unexpected strength was seen broadly. Nearly every category in the report, from furniture to motor vehicles to electronics, posted gains.

The Department of Labor releases the total number of new claims for unemployment insurance each week. The latest reading was just 210,000, below the consensus forecast. Bigger picture, this was far below the inflated figures seen during the early months of the pandemic, and in line with the levels which were typical during the solid labor market in 2019. Weekly jobless claims are important because they are one of the timeliest indicators of labor market trends. While other recent economic reports suggest that companies may be scaling back on hiring new employees, this report indicates that they remain reluctant to lay off workers.

Lower mortgage rates over the last few weeks have boosted loan origination activity. According to the Mortgage Bankers Association, applications to refinance increased 6% from last week and were a massive 152% higher than one year ago. Purchase applications rose 10% from the prior week and were up 14% from last year at this time.

Looking ahead, attention will remain fixed on the conflict in the Middle East. The next Fed meeting will take place on Wednesday, and no change in the federal funds rate is expected. Investors will be looking for guidance about the impact of higher oil prices on future monetary policy. For economic reports, Housing Starts will come out on Wednesday. The PCE price index, the inflation indicator favored by the Fed, will be released on Thursday. First quarter Gross Domestic Product (GDP), the broadest measure of economic activity, also will come out on Thursday. The ISM national manufacturing sector index will be released on Friday.

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