Market Commentary

Updated on January 19, 2025 7:15:39 PM EST

Starting this week's activities will be December's Leading Economic Indicators (LEI) at 10:00 AM ET Wednesday. The Conference Board, who is a New York-based business research group, compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Wednesday's release is expected to reveal an increase of 0.1%, meaning the indicators are predicting a flat to modest growth in economic activity over the next several months. Weaker economic activity is usually considered good news for mortgage rates.

There also is a 20-year Treasury Bond auction taking place Wednesday. These auctions show what type of demand investors have for longer-term securities. If demand is strong, particularly from international buyers, we may see the broader bond market improve after results are posted at 1:00 PM ET. On the other hand, lackluster interest in the securities may lead to an upward revision to rates before the end of the day.

Thursday doesn't have any relevant data except for the weekly unemployment update. The week wraps up Friday with two late morning moderately important releases. December's Existing Home Sales report from the National Association of Realtors is expected to reveal a small increase from November's sales. This would indicate the housing sector strengthened a little last month. Since housing weakness makes broader economic growth less likely, a decline in sales would be preferred by bond traders and mortgage shoppers.

January's preliminary reading to the University of Michigan's Index of Consumer Sentiment will finish this week's calendar. It helps predict consumer willingness to spend. By theory, if consumers feel better about their own financial and employment situations, they are more apt to make a large purchase in the near future. Stronger consumer spending numbers translate into economic growth that makes stocks more appealing and bonds less attractive to investors. Predictions show little change from December's 73.2. The lower the reading, the better the news for bonds and mortgage rates.

Also worth mentioning is that corporate earnings season gets into full swing this week. There are plenty of big-named public companies announcing their quarterly and annual earnings this week. These generally influence stock trading more than bond trading. However, if the common theme is disappointing results from the bellwether companies, a strong negative reaction in stocks could fuel bond buying that pushes yields lower. This would be good news for mortgage shoppers since mortgage rates tend to track bond yields.

Overall, no day stands out as a good candidate for most important for rates and the same can be said for calmest day. There just aren't any key events scheduled that are expected to cause a bond rally or sell-off. Not even tomorrow's inauguration is expected to have an impact. We will likely see minor changes in rates day to day rather than larger moves unless something completely unexpected happens.

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