In a holiday-shortened trading week, mortgage rates finished the week slightly improved. But, because many traders had left early for Thanksgiving, matching buyers and sellers at any given price proved to be an exercise, to say the least. Mortgage rates bounced wildly as a result.
Between now and the New Year, expect more of the same volatility. Fewer market players means less stability in mortgage bond prices and, therefore, in mortgage rates.
This week, markets have a plethora of data to digest, plus they will be speculating about the outcome of this year's Holiday Shopping season. With more spending by shoppers, fears of a recession should wane, stabilizing mortgage rates somewhat.
On Tuesday, we'll see the Existing Home Sales report for October. There's nothing that should surprise us here -- the real estate story has been beaten to a pulp in the papers. Any figure below 5 million, though, will likely spark talk of a recession. That could be bad for mortgage rates.
The same can be said for Thursday's New Home Sales report. Remember that the difference between existing sales and new sales is that Existing Home Sales measures homes sold by a "homeowner"; New Home Sales measures homes sold by a developer/builder.
Then, on Friday, we'll be treated to the Federal Reserve's favorite inflationary measure -- the Personal Consumption Expenditures (PCE). PCE is expected to show 1.8 percent year-over-year growth, a figure generally believed to be neutral. If PCE surprises to the high-side, expect mortgage rates to rise on fears of inflation.
