MARKET COMMENT
Mortgage bond prices finished the week higher which put downward pressure on rates. Most of the data showed economic strength. A viral outbreak in China dominated headlines and caused global economic uncertainty which resulted in some flight to safety buying of MBSs. The World Health Organization was evenly split on a vote to issue a global health emergency. International travel was still affected by the end of the week as travelers to and from Asia were screened at entry points across the globe. Existing home sales were 5.54M. Analysts expected a reading of 5.42M. The FHFA House Price Index rose 0.2% as expected. Weekly jobless claims were a lower than expected 211K. Analysts expected a reading near the 215K four-week average. Continuing claims were 1731K versus the expected 1746K. Mortgage interest rates finished the week better by 1/4 to 3/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| New Home Sales | Monday, Jan. 27, 10:00 am, et | 725K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Durable Goods Orders | Tuesday, Jan. 28, 8:30 am, et | Up 0.5% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Jan. 28, 10:00 am, et | 127.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Trade Data | Wednesday, Jan. 29, 8:30 am, et | $68B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Fed Meeting Adjourns | Wednesday, Jan. 29, 2:15 pm, et | No rate changes | Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, Jan. 30, 8:30 am, et | 212K | Important. An indication of employment. Higher claims may result in lower rates. |
| Q4 GDP | Thursday, Jan. 30, 8:30 am, et | Up 2.1% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, Jan. 31, 8:30 am, et | Up 0.3%, Up 0.3% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Jan. 31, 8:30 am, et | Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Q4 Employment Cost Index | Friday, Jan. 31, 8:30 am, et | Up 0.7% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
BUSY WEEK
Economic data is the number one reason mortgage interest rates move daily. Data is compiled from numerous sources and comes in two flavors, economic growth and inflation. Some releases are more important than others and thus are more likely to cause wider swings in mortgage rates. Rates move in relation to the deviation from expectations. We have significant releases all week. The potential for mortgage interest rate volatility is greater as a result. Volatility can be the enemy so caution is key.