Due to the Christmas holiday’s, we have a shortened trading week yet it is full of economic data.  Today we do not get the release of any economic reports. 


      -          Final GDP, economists are expecting a -0.5% after last months -0.5%

-          Existing Home Sales, economists expecting 4.93m after last months 4.98m.  The number released is the annual pace of homes selling and not monthly.

-          Consumer Sentiment, economists expecting 58.6 after last months 57.9

-          New Home Sales, economists expecting 420k after last months 433k. 


-          Durable Orders, economists expecting -3.1% after last months -6.2% drop

-          Personal Income, economists expecting a 0.0% reading after last months 0.3%

-          Personal Spending, economists expecting  -0.8% after last months -1.0%

-          Jobless Claims, economists expecting 550k after last months 554k

-          Personal Consumption Expenditure, which measures inflation on the consumer level and this is the fed’s favorite measure of inflation.  Hopefully everyone recalls that inflation is the mortal enemy to mortgage rates.  The fed would like to see this come in between 1 to 2% and currently year over year is at 2.2%. 

Currently this morning mortgage backed securities have opened in negative territory.  This week volume should be very light which causes a lot of volatility as one big trade can have a larger impact with the lower volume.   This is very normal on the week of Christmas since the market will be closed for Christmas Day and a shortened day on Wednesday; in addition a lot of traders are taking the week off.  I suspect that we will see the same rates we had last week with lenders being unwilling to pass along the improvements we have been seeing until next year.  Keep in mind, lenders have been swamped with business over the last couple weeks, so to slow down submissions they raise rates in way to say, stop sending me loans, we need to catch up.  I do suspect over this week and next week, many loan originators will also be taking days off and many consumers will not be available or unwilling to speak about their mortgage over the holidays.  This will definitely lower the amount of submissions to lenders allowing them to catch up.   Once they are caught up, lenders will attract new loan submissions by passing along the gains and lowering the interest rates they offer.  This is one of the other reasons why we have had a float your rate stance if closing next year.  Lenders will pass along these gains, it is just a matter of time.  We do have a significant floor of support which we are terming Base Camp, that should prevent mbs from selling off and we still have our backstop, the Treasury department with a checkbook worth $500 billion to buy mbs if they do sell off.