• Monday’s mortgage rates should be lower by approximately .125 of a discount point if compared to Friday’s early pricing. The bond market is currently up 3/32 (4.05%).
• Stocks are also starting the week with early gains, pushing the Dow up 78 points and the Nasdaq up 394 points.
• There are no relevant economic data or other events scheduled for today.
• The remainder of this holiday-shortened week brings us the release of four monthly reports, in addition to a couple of Treasury Note auctions and a periodic Fed report. Some of those reports were previously delayed by the government shutdown.
• We are also now getting the regular weekly unemployment update since the shutdown has ended.
• First will be September’s Producer Price Index (PPI) at 8:30 AM ET. It will give us some insight into inflationary pressures at the wholesale level of the economy. Analysts are expecting it to show a 0.3% increase in the overall reading and a 0.2% rise in the more important core data that excludes volatile food and energy prices. Good news for mortgage rates would be weaker than expected readings that make bonds more attractive to investors and could allow the Fed to make a rate cut next month.
• Even though tomorrow’s PPI release is aged at this point, a recent announcement that there will be no official October release of this data could offset that reduction in influence.
• September’s delayed Retail Sales data will also be released early tomorrow morning. This report tracks consumer spending that makes up over two-thirds of the U.S. economy. Forecasts have sales rising 0.3% from August, indicating consumers spent more in September than the previous month. Bond traders and mortgage shoppers prefer to see a smaller increase in sales that would likely lower rates, assuming the PPI doesn’t show a negative surprise.
• November's Consumer Confidence Index (CCI) will be tomorrow’s third release, coming at 10:00 AM ET. This Conference Board index helps us track consumer confidence in their own financial and employment situations. Traders are expecting to see a decline from October's 94.6. A decline indicates surveyed consumers felt better about their finances last month than they do the current month and are less likely to spend. Good news for rates would be a reading below the predicted 93.3.
• Also tomorrow is the 5-year Treasury Note auction that will not directly impact mortgage pricing, but can influence general bond market sentiment. If these types of sales go poorly, we often see broader selling in the bond market that leads to upward revisions in mortgage rates. Results will be announced at 1:00 PM ET, making this an early afternoon event for the mortgage market.
• The U.S. financial markets will be closed Thursday in observance of the Thanksgiving Day holiday. There will not be an early close Wednesday, but the stock and bond markets will close early Friday and will reopen next Monday morning.
• Overall, the most important day for rates is tomorrow with the release of three economic reports, two of which are traditionally considered to be highly important even though they are aged now. The calmest day will probably be Friday since many traders will leave Wednesday afternoon and bot be back until Monday morning.
• We are not expecting as much volatility as last week, but the markets can get active without notice. Therefore, it would be prudent to keep an eye on them if still floating an interest rate.
• Visit our Daily Commentary page on our site for detailed explanations on current news that is relevant to mortgage rates.
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