Market Commentary

Updated on December 10, 2018 10:19:54 AM EST

There is nothing scheduled for today that is relevant to mortgage rates. The rest of the week brings us the release of four pieces of economic data that may influence mortgage rates in addition to a couple of Treasury auctions. We also need to watch stock movement because as we have seen recently, volatility in stocks can heavily affect bond trading and mortgage rates. Generally speaking, stock losses help boost bond prices, leading to lower mortgage rates.

Novembers Producer Price Index (PPI) will start this week’s activities at 8:30 AM ET tomorrow morning. It shows inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If it reveals stronger than expected readings, indicating that inflationary pressures are rising faster than thought, the bond market will probably react negatively. That would drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond by pushing mortgage rates slightly lower. Analysts are expecting no change in the overall index and a 0.1% rise in the core data.

Overall, Wednesday is a good candidate for most important day of the week due to consumer-level inflation data and the 10-year Treasury Note auction, but Friday could be pretty active also. The calmest day may be Thursday. However, stocks can be more unpredictable than bonds. With them having such a heavy influence on the bond and mortgage markets lately, any day may be active. Therefore, it would be extremely prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

 ©Mortgage Commentary 2018