• This week brings us the release of five monthly economic reports, some of which are traditionally considered to be extremely important to the markets. There is also a Treasury auction midweek and more Fed-member speaking engagements throughout the week.

 • Tomorrow doesn’t have any relevant data, but does have a couple of the Fed speeches that have the potential to become a matter of interest for bond trading and mortgage pricing.

 • The economic calendar begins early Tuesday morning with the release of two major reports.

 • Likely to draw more attention will be the government’s Employment report that will include November’s data and parts of October that were delayed by the shutdown. Apparently, we won’t ever get October’s unemployment rate due to the shutdown. Forecasts have the unemployment rate holding at November’s 4.4% and 40,000 new jobs added to the economy.

 • Another headline number that bonds tend to be very sensitive to is average hourly earnings. Rising wages fuel inflation that makes bonds less appealing to investors, leading to increases in bond yields and mortgage rates. Tuesday’s report is expected to show a 0.3% rise in earnings.

 • Favorable news for bonds and mortgage rates will be a smaller payroll number for November, an increase in unemployment and a softer rise in earnings. That scenario would indicate weakness in the employment sector.

 • Tuesday’s second highly important report will be October’s Retail Sales report, also at 8:30 AM ET. This is another shutdown-delayed report that is a bit aged now. November’s update is expected to come sometime next month. It is expected to reveal a 0.2% rise in consumer spending, which makes up over two-thirds of the U.S. economy. A decline in sales would be very good news for mortgage rates.

 • Wednesday’s only relevant events are a couple of Fed speeches and a 20-year Treasury Bond auction that may come into play during afternoon trading. If the 1:00 PM ET auction results announcement indicates there was a strong demand for the securities, we could see bond strength afterward that causes a slight improvement in rates before the end of the day.

 • Thursday has another highly influential report set for release. It is titled November’s Consumer Price Index (CPI), but as with the Employment report it will include some of October’s data also. The CPI tracks inflationary pressures at the consumer level of the economy. Analysts are expecting to see a 0.3% increase in both the overall reading and also the more important core data that excludes volatile food and energy costs.

 • The annual CPI readings are expected to show inflation ran at a rate above 3.0%, well above the Fed’s preferred 2.0% pace. Rising inflation erodes the value of a bond’s future fixed interest payments, causing bonds to become less appealing to investors. Accordingly, weaker than expected readings would be very good news for mortgage rates.

 • The week comes to an end Friday with two moderately important releases. December's revised Index of Consumer Sentiment from the University of Michigan will be announced at 10:00 AM ET Friday. Analysts are expecting a reading of 53.3, unchanged from the initial estimate that was announced earlier this month. Bond traders would prefer to see a large decline.

 • Next up will be Existing Home Sales figures for November at 10:00 AM ET. The National Association of Realtors is expected to announce home resales were little changed from October’s level, signaling the housing sector was flat last month. Good news for rates would be a large decline in sales because a weakening housing sector makes broader economic growth more difficult and bonds tend to thrive in weaker economic conditions.

 • Overall, Tuesday is a strong candidate for most important day for rates because of the strong influence the Employment and Retail Sales reports have. The calmest day may be tomorrow unless a big headline crosses the wires overnight or early tomorrow morning.

 • We are expecting to see plenty of movement in the markets and mortgage rates this week. Therefore, please proceed cautiously if still floating a rate and closing in the near future. Some days may bring multiple changes to pricing.

 • Visit our Daily Commentary page on our site for detailed explanations on current news that is relevant to mortgage rates.

 

 

 

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If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.