We are two trading days from the yearly close for the equity markets and the results—positive or negative for the year—are still in doubt. Today appears to be setting up for a positive trading day while tomorrow—if tradition holds, could be a down day. So what does this mean for mortgage rates? Probably not a whole lot. Today does give traders of mortgage-backed securities plenty to consider however—weekly jobless claims, Chicago PMI, pending home sales and Italian bond auctions.
The weekly jobless claims report in the US showed claims below the key 400,000 level but higher than last week. This was the first weekly increase for claims in over a month. Nevertheless the four-week moving average still moved lower, suggesting that the overall trend is toward improvement.
The Chicago PMI report which measures manufacturing activity for Chicago region, a key region for manufacturing in the US, was stronger than expectations. A slight dip, given the holiday season had been expected, yet reading came in nearly same as the November reading.
After a major increase in pending home sales last month, this month’s report is expected to indicate only a slight increase. However, with the major issues facing the housing sector, no impact on the market is expected today.
In Italy an auction of 10 year bonds was held and resulted in yields below the important 7% level. However, 6.98% is so close to 7% that analysts have deemed the auction marginally unsuccessful and Italian Prime Minister Mario Monti has released a statement calling the yields “unreasonable”.
Tomorrow is completely devoid of US economic data meaning that news from Europe has the best chance to cause a market move. Otherwise tomorrow could follow today and be rather quiet.
Early trading in the MBS markets this morning suggests that current mortgage rates for purchase and refinance loans will hold close to current levels.
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