This holiday-shortened week has only one monthly economic report scheduled for release that is relevant to mortgage rates in addition to a couple of potentially influential Treasury auctions. The financial and mortgage markets will be closed tomorrow in observance of the Christmas Day holiday and will reopen for regular trading Tuesday.
The Conference Board will post their Consumer Confidence Index (CCI) for December late Wednesday morning. This is a fairly important release because it measures consumer willingness to spend. If consumers are more confident about their personal financial and employment situations, they are more apt to make a large purchase in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched closely by market participants and can affect mortgage rate direction. Current forecasts are calling for a decline in confidence from November's reading of 129.5. Analysts are expecting Wednesday's release to show a reading of 128.0, meaning consumers felt less optimistic about their own financial situation than they did in November. The lower the reading, the better the news it is for bonds and mortgage pricing.
We also have Treasury auctions scheduled three days this week. The two that are most likely to influence mortgage rates are Wednesday's 5-year and Thursday's 7-year Note sales. If those sales are met with a strong demand, bond prices may rise enough to lead to improvements in mortgage rates shortly after the results are posted. But a lackluster demand from investors may create bond selling and upward revisions to mortgage rates Wednesday and/or Thursday. Results will be announced at 1:00 PM each day, so any reaction will come during early afternoon trading.
The bond market will close at 2:00 PM ET Friday ahead of the New Year's Day holiday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed next Monday for the holiday and will reopen next Tuesday morning for regular hours. As a result of the holiday schedule, we could see lighter than normal trading the latter part of the week. Therefore, don't be surprised to see larger moves in bonds with little apparent reason. I would be more concerned with bond losses earlier in the week than any that may come later in the week.
Overall, I am expecting Wednesday to be the most active day for mortgage rates, although I don't see much to be worried about in this week's calendar. It is difficult to label any day as the calmest with several days of nothing scheduled to drive trading. Still, the markets can get active at any time, so please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.
We would like to take this opportunity to wish you and yours a safe and wonderful holiday season!