rates continued to move higher

Last week, rates continued to move higher early in the week, until rates managed to rally and end up close to where they began. The week ahead might appear to be light on economic news, however there are several economic reports scheduled for this week that can have an impact on rates. So where are rates headed?

Last week, rates began on an upward trek, however after several dismal earnings reports from large retailers like Macys and Deere & Co. the inflow of investment from stocks to bonds helped bonds rally and rates decline to just about where they started.

The week ahead features two key reports for the housing industry, both Building Permits and Housing starts will be released on Tuesday. In addition to these housing industry reports the Producer Price Index (PPI) will also be released on Tuesday. However, with the recent retreat in crude oil prices many economists believe the PPI report might be unjustly inflated. Will the bond investors agree, or will they take this report at face value?

Also in store for this week is the Philadelphia Fed Report, scheduled for release on Thursday. This monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports. If this report is strong investors might see fit to move a significant portion of their investments back into stocks, at the detriment of bonds. If this occurs rates will likely move higher.

The bottom line: There is a strong possibility that rate movement may be exactly opposite of last week, that is moving lower at the beginning of the week and higher before the week comes to a close. In any case, Tuesday and Thursday's economic news will likely influence rate movement for the week.