Monday, December 2, 2019

What’s going on and why does it matter?

Mortgage bonds opened sharply lower this morning and it will be interesting to see if they can remain in positive territory above their 30-day moving average. There were some positive economic reports in Europe and China over the weekend, causing stocks to rally at the expense of bonds. Investors are also watching US-China trade talks where a phase one agreement appears pushed back to the end of the year or into next, although President Trump is expected to pause tariffs that were scheduled to kick-in mid-month. In the meantime, the President reinstated tariffs on steel and aluminum products effective immediately from Brazil and Argentina due to a “massive devaluation of their currencies.” The Fed is scheduled to purchase up to $1.502 billion of conventional mortgage bonds today, which may buoy bond prices. The economic calendar is quite full this week, and it includes the always-important jobs report scheduled to be released on Friday.

What should you do about it?

Watch and see if mortgage bonds can bounce higher off their 30-day moving average, but be prepared to lock your rate if mortgage bonds break below that level……

Economic reports that may impact mortgage rates this week:

Mon 2 DecConstruction SpendingOct0.5%0.4% 
Mon 2 DecISM Mfg PMINov48.349.2 
Wed 4 DecADP National EmploymentNov125k140k 
Wed 4 DecISM Non-Mfg PMINov54.754.5 
Thu 5 DecInitial Jobless ClaimsWeek of Nov 25213k215k 
Thu 5 DecFactory OrdersOct-0.6%0.3% 
Fri 6 DecNon-Farm PayrollsNov128k180k 
Fri 6 DecUnemployment RateNov3.6%3.6% 
Fri 6 DecAverage EarningsNov0.2%0.3% 
Fri 6 DecU of Mich Consumer Sent.Dec96.897.0 

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