This week has four pieces of economic data scheduled, but we will only get two of them because of the shutdown. One of the delayed reports is not only the most influential of the week, it is also one of the more important monthly reports. The stock and bond markets will be closed tomorrow for the Martin Luther King Jr holiday and will reopen for regular trading Tuesday. Because the markets will be closed, there will not be an update to this report tomorrow.
There does not appear to be much progress being made in ending the partial government shutdown. As we roll into the second month of the impasse this week, reports are starting to be delayed for a second time. Fortunately, many of the reports that draw the most attention have not been affected by the shutdown. That said, there are still some that do affect mortgage rates and are considered important that have not been released yet, preventing the markets and the Fed from having all the information they usually rely on. The longer this drags on, the bigger the problem it becomes for market participants and FOMC members. Without that data, it is difficult to gauge overall economic growth and the status of the economy.
Starting the week's calendar will be December's Existing Home Sales from the National Association of Realtors late Tuesday 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 a decline in sales from November's level, meaning the housing sector softened 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.
December's Leading Economic Indicators (LEI) will be released at 10:00 AM Thursday. 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 much stronger than predicted 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. 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 should follow suit. On the other hand, active stock markets could lead to a noticeable move in mortgage rates.