Monday’s bond market has opened in negative territory as investors prepare for this week’s activities. The stock markets are starting the week with minor losses of 19 points in the Dow and 4 points in the Nasdaq. The bond market is currently down 15/32 (1.84%), but due to strength late Friday, I don’t believe we will see too much of a change in this morning’s mortgage rates.
There is nothing of importance being posted today. The rest of the week is quite busy though with six economic reports along with other events that are relevant to bond trading and mortgage rates. In addition to those six reports, there is also a two-day FOMC meeting and a couple of Treasury auctions that have the potential to affect bond trading enough to slightly move rates. The week’s calendar kicks off tomorrow with three economic reports.
The first is December’s Durable Goods Orders at 8:30 AM ET that helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. These are also known as big-ticket items and include things such appliances, electronics and airplanes. The data is known to be quite volatile from month-to-month, but is currently expected to show an increase in orders of approximately 0.6%. A decline in orders would be considered good news for bonds and mortgage rates. Even though this an important report, a slight variance likely will have little impact on tomorrow’s mortgage pricing because of the large swings that are common in the data. Bond traders would prefer to see a large decline that would indicate weakness in the manufacturing sector.
January’s Consumer Confidence Index (CCI) will be posted at 10:00 AM ET tomorrow. This report is considered to be of moderate to high importance to the bond market and therefore can move mortgage rates if it shows any surprises. It is an indicator of consumer sentiment, which is important because waning confidence in their own financial situations usually means that consumers are less willing to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, market participants are very attentive to related data. Analysts are expecting to see a rise from December’s reading, indicating consumer confidence was stronger than last month. A reading much smaller than the expected 95.5 would be ideal for the bond market and mortgage rates. A higher reading than forecasts would hint that consumers are more likely to spend in the immediate future, fueling economic growth and possibly pushing mortgage pricing higher tomorrow.
December’s New Home Sales is the final release of the day, also at 10:00 AM ET tomorrow. It is considered to be the sister release to last week’s Existing Home Sales, giving us a small snapshot of housing sector strength. It tracks a much smaller portion of home sales than last week’s report did and is forecasted to show a decline in sales of newly constructed homes. However, this data is not important enough to heavily influence mortgage pricing unless it varies greatly from forecasts.
Overall, it is difficult to label any particular day this week as the most important for mortgage rates with so much going on. Wednesday has no economic data being posted, but it does have the FOMC meeting adjournment that is always big news. Friday’s GDP report is highly important but tomorrow has multiple reports set for release that can influence mortgage rates. And stocks can affect bond trading and mortgage pricing any day, as we have seen with all the recent volatility. With all of this scheduled, there is a decent chance of seeing a very active week in mortgage rates this week. Therefore, please maintain constant contact with your mortgage professional if still floating an interest rate and closing in the near future.