Market Commentary

Updated on October 26, 2020 10:18:15 AM EDT

This week's calendar kicked off this morning with the release of September's New Home Sales data at 10:00 AM ET. The Commerce Department announced that sales of newly constructed home fell 3.5% last month when forecasts were calling for an increase in sales. Furthermore, the decline comes even though August's sales were revised lower than previously thought. That means the number of home sales was well below expectations, making the data favorable for mortgage rates.

The rest of the week brings us the release of six more monthly and quarterly economic reports that may influence mortgage rates in addition to two Treasury auctions that have the potential to do so also. The most important data comes later in the week, but the other reports carry enough significance to change mortgage rates also.

Tomorrow has two relevant reports scheduled, starting with Durable Goods Orders for September at 8:30 AM ET. It gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Analysts are currently calling for a 0.6% rise in new orders for products such as airplanes, appliances and electronics. If we see a larger increase in orders, mortgage rates will probably rise as bond prices fall. On the other hand, a decline should be good news for the bond market and mortgage rates. This data can be quite volatile from month to month and is difficult to forecast. Therefore, a small variance in orders either way, likely will have little effect on tomorrow's bond trading or mortgage pricing.

Second will be October's Consumer Confidence Index (CCI) at 10:00 AM ET tomorrow. This Conference Board index helps us gauge consumer willingness to spend. It is expected to show little change from last month's 101.8 reading. That would mean surveyed consumers were just as optimistic about their own financial and employment situations as they were last month. Good news for the bond market would be a noticeable decline because waning confidence usually translates to weaker consumer spending levels, which makes up over two-thirds of our economy. Current forecasts are showing a reading of 101.9. The lower the reading, the better the news it is for mortgage rates.

Overall, Thursday is the best candidate for most important day of the week due to the initial GDP reading and weekly unemployment figures being released. The calmest day could be Wednesday with no data on the calendar. We also have to keep in mind this is corporate earnings season, which can heavily influence stocks and also have an impact on mortgage rates. With so much on tap this week, expect to see multiple days with changes to mortgage rates. Don't be surprised to see an intraday revision or two also. If still floating an interest rate and closing in the near future, it would be prudent to keep an eye on the markets as this week's calendar is quite busy.

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