Mortgage Market Update
This holiday-shortened week has only two relevant economic report for the markets to digest and neither is considered to be highly important. The stock and bond markets will be closed tomorrow for the Martin Luther King Jr holiday and will reopen for regular trading Tuesday.
December's Existing Home Sales from the National Association of Realtors is scheduled for late Wednesday morning. This data will give us a measurement of housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show an increase in sales from November's level, meaning the housing sector strengthened last month. Ideally, bond traders would like to see a large decline in sales that would point toward sector weakness because weaker housing makes broader economic growth more difficult. However, as long we don't see a significant surprise in its results, it shouldn't have a noticeable impact on mortgage rates. The second monthly report of the week will come late Thursday when December's Leading Economic Indicators (LEI) will be posted. The Conference Board, who is a New York-based business research group, compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency it is not considered to be of high importance to the financial and mortgage markets. Thursday's release is expected to show a 0.1% decline, meaning the indicators are predicting little growth in economic activity over the next several months. As long as we don't see a noticeable increase, I don't think this data will have much of an influence on mortgage pricing. Also worth noting is the fact that we are in corporate earnings season. As big-named companies report their results, stocks should react accordingly. Strong earnings will likely boost stocks and hurt bond prices, pushing mortgage rates higher. Generally speaking, news that is good for stocks is bad for bonds and mortgage rates. However, disappointing results could lead to lower mortgage rates. With little economic data or other events scheduled this week to driving trading, stocks may end up being the biggest influence on mortgage rates. Overall, no day stands out as a strong candidate for most active day of the week. There is little data for the markets to digest, leaving stocks to be the focus several days. If the major stock indexes remain fairly calm, bonds and mortgage rates could follow suit. On the other hand, active stock markets could lead to noticeable moves in mortgage rates.