This week has only two monthly or quarterly economic reports for the markets to digest in addition to a couple of Treasury auctions that can affect rates. It likely will be a much quieter week for the bond market and mortgage rates compared to last week.
November's Factory Orders data will finally be posted at 10:00 AM ET tomorrow. This report was delayed due to the government shutdown. It is similar to the Durable Goods Orders release in giving us a measurement of manufacturing sector strength, but this data includes new orders for both durable and non-durable goods. It normally is not one of the more important reports we get each month and considering tomorrow’s release will cover November, there is little chance of this report causing much movement in mortgage rates. Analysts are expecting a 0.3% rise in new orders, indicating a bit stronger manufacturing sector. The bond market would like to see a large decline, meaning that manufacturing activity was weaker than many had thought.
Employee Productivity and Costs data for the 4th quarter will be released early Wednesday morning. It can cause some movement in the bond market but should have a minimal impact on mortgage pricing. Good news would be the productivity reading showing a much stronger increase than the 1.7% that is forecasted. That is because higher levels of worker productivity allow the economy to expand while keeping inflation subdued.
The next event we need to be concerned with is the first of the two important Treasury auctions Wednesday afternoon. 10-year Treasury Notes will be sold Wednesday, followed by 30-year Bonds Thursday. Wednesday's auction is the more important of the two as it will give us an indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward afternoon revisions to mortgage rates.
Barring a surprise posting of delayed economic data, that concludes this week’s monthly and quarterly releases. There are some Fed speaking engagements this week that may draw attention and we are still in corporate earnings season, which can bring a heavy influence on bonds and mortgage rates at times. The most active day of the week for rates is difficult to predict with so little on the calendar, but Wednesday could be more active than others. The best candidate for calmest day is Friday. Despite the light calendar, it still would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.