This holiday-shortened week has only two monthly economic reports scheduled for release that are relevant to mortgage rates. One of those two is considered to be highly important to the bond and mortgage markets. There is nothing of importance Monday, but every other day does have at least one event scheduled that could have an impact on the financial markets and mortgage rates.
The Conference Board will post their Consumer Confidence Index (CCI) for December late Tuesday morning. This is a fairly important release because it measures consumer willingness to spend. If consumers are more confident about their personal financial and employment situations, they are more apt to make large purchases. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watched closely by market participants and can affect mortgage rate direction. Current forecasts are calling for a large increase in confidence from November’s reading of 70.4. Analysts are expecting Tuesday’s release to show a reading of 77.1, meaning consumers felt much better about their own financial situation than they did in November. The lower the reading, the better the news it is for bonds and mortgage pricing.
The bond market will close at 2:00 PM ET Tuesday ahead of the New Year’s Day holiday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed Wednesday for the holiday and will reopen Thursday morning for regular hours. As a result of the holiday schedule, we should see lighter than normal trading a couple days. However, I don’t believe it will be as thin as we saw last week. That should help prevent larger moves in bonds on days with little or no news to justify the move like we saw last week.
After the holiday, the Institute for Supply Management (ISM) will post their manufacturing index for December late Thursday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. That indicates manufacturing sector strength rather than contraction. Analysts are currently expecting to see a 56.9 reading in this month’s release, meaning that sentiment softened from November’s 57.3. A smaller reading will be good news for the bond market and mortgage shoppers, while a higher than expected reading could lead to higher mortgage rates Thursday morning as it would point towards stronger economic growth.
Also worth noting are a handful of Fed member speaking engagements all scheduled for Friday afternoon, including one by Chairman Bernanke. None of them are considered to be highly important or likely to be market-moving, but whenever they speak publicly, particularly the Fed Chairman, their words have the potential to influence the markets. There are five set for Friday with the first scheduled for 12:45 PM ET and the last at 5:00 PM ET. Chairman Bernanke is expected to speak in Philadelphia at 2:30 PM ET. This means any reaction to their speeches will come during afternoon trading.
Overall, I am expecting to see Thursday be the most active day for mortgage rates, although Tuesday morning could also be fairly busy as the year comes to an end. It is difficult to label any day as the calmest because even Monday that doesn’t have anything scheduled to be posted, could also be relatively busy following last week’s light holiday trading. The benchmark 10-year Treasury Note yield closed the week at 3.00% Friday, which is above the previous key level of 2.95%. Due to last week’s extremely light trading volume, I am not too concerned about it closing at that level. However, I am looking for it to move back below nearly immediately or we could be in for a sizable upward move in mortgage rates very soon. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.