Tuesday’s bond market has opened in positive territory as investors prepare for this week’s global events. Stocks are starting the holiday-shortened week with relatively minor losses of 54 points in the Dow and 5 points in the Nasdaq. The bond market is currently up 15/32 (1.78%), but due to heavy selling Friday before the long weekend, we should see little change in this morning’s mortgage rates or even a slight increase if comparing to Friday’s morning pricing.
There is nothing of importance being released today that is expected to affect rates. The rest of the week brings us the release of only three pieces of monthly economic data for the markets to digest, but none of them are considered to be highly important for mortgage rates. We also have some key economic data coming from overseas and an FOMC-equivalent event in Europe later this week that is expected to yield a new bond-buying program in the Euro zone in an attempt to boost economic growth there. In addition to all of that, we also have earnings releases from several big-name companies that traditionally affect broader stock trading and therefore, could have an impact on the bond market.
The first data of the week is December’s Housing Starts at 8:30 AM tomorrow. It helps us measure housing sector strength and future mortgage credit demand by tracking construction starts of new homes. It is not considered to be one of the more important releases each month, so I don’t see it causing much movement in mortgage rates tomorrow but does carry the potential to affect trading and rates if it shows a significant surprise. Analysts are expecting to see an increase in new home starts between November and December.
Overall, despite a light week in terms of the number of economic reports scheduled, we still may see a very active week in the markets and mortgage pricing. We will be focusing on items overseas this week just as much as our economic reports. Thursday or Friday are the best candidates for most important day of the week. I suspect we will have more than one day of volatility and intraday revisions to mortgage rates though. Accordingly, please maintain contact with your mortgage professional and proceed cautiously if still floating an interest rate and closing in the near future.