Market Commentary

Updated on February 21, 2025 10:15:17 AM EST

This week's calendar came to a close at 10:00 AM ET with the release of two pieces of economic data. The National Association of Realtors announced home resales fell 4.9% last month, indicating weakness in the housing market. This was a larger decline than was expected and is being attributed to mortgage rates that remain stubbornly high. Weakness in the housing sector makes broader economic growth more difficult. Therefore, we can consider this report to be good news for bonds and mortgage rates.

Also in the good news column is February's updated Index of Consumer Sentiment from the University of Michigan that came in at 64.7. Forecasts had the index slightly changing from the previous estimate of 67.8, not declining like it did. The lower reading means surveyed consumers were far less optimistic about their own financial situations than previously thought. Waning confidence usually translates into softer consumer spending numbers, limiting economic growth (see last Friday's Retail Sales report). This is why this report is also good news for mortgage rates.

Next week has a couple of economic reports scheduled that we expect will have an impact on mortgage rates, but the week starts light with nothing of importance set for Monday. The most important releases will be posted later in the week, including the Fed's preferred inflation readings (PCE indexes) within the Personal Income and Outlays report early Friday morning. We will also get the first revision to the 4th Quarter Gross Domestic Product (GDP) reading after last month's initial estimate showed the economy grew at a slower than expected pace the last three months of 2024. In addition to the data, there are two Treasury auctions that may have a minor influence on rates during afternoon trading midweek. Look for details on all of next week's activities in Sunday evening's weekly preview.

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