Mortgage bond prices finished the week near unchanged which held rates steady. We started the week on a slightly negative note Monday as stocks surged higher. The multi-billion-dollar Fed MBS purchases continued which buffered the negative movement and by mid-week rates were near unchanged. The data was solid considering the economic disruptions of the virus. FHFA housing rose 1.7% vs 1.3%. Consumer confidence was 96.1 vs 95.8. Q3 GDP was 33.1% as expected. Durable goods rose 1.3% vs 1.1%. Weekly jobless claims were 778K vs 775K. New home sales were 999K vs 985K. Income fell 0.7% vs an expected 0.2% increase. Spending rose 0.5% as expected. Core PCE inflation was unchanged vs an expected 0.1% increase. Mortgage interest rates finished the week with close to no discount point changes.


Economic IndicatorRelease Date & TimeConsensus EstimateAnalysis
ISM IndexTuesday, Dec. 1,
10:00 am, et
57.5Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Construction SpendingTuesday, Dec. 1,
10:00 am, et
Down 0.8%Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
ADP EmploymentWednesday, Dec. 2,
8:30 am, et
420KImportant. An indication of employment. Weakness may bring lower rates.
Weekly Jobless ClaimsThursday, Dec. 3,
8:30 am, et
770KImportant. An indication of employment. Higher claims may result in lower rates.
Trade DataFriday, Dec. 4,
8:30 am, et
$64.7B deficitImportant. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
EmploymentFriday, Dec. 4,
8:30 am, et
Payrolls +650K
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.
Factory OrdersFriday, Dec. 4,
8:30 am, et
Up 1.1%Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.

Fed Minutes

The minutes from the last Fed meeting were released last week and shed a lot of light on monetary policy, asset purchases, inflation, and much more. The Fed noted, “The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses. The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.” The Fed spent approximately $80B monthly since March buying mortgage-backed securities to keep rates historically low. The key statement from the recent release indicated that will continue. “Participants judged that it would be appropriate over coming months for the Federal Reserve to increase its holdings of Treasury securities and agency MBS at least at the current pace.” This is great news for low mortgage interest rates.