It was another volatile week in the equity market, with debt rates remaining pretty steady. The data reports relating the US economy were at expected levels, and Mario Draghi's remarks held no surprises. He confirmed that the European Central Bank (ECB) will move forward with their plan to cease bond purchases, information that has been widely known for some time now. All in all, it was a fairly quiet week for mortgage rates, evidenced by a slight downward move.
Analysts have been keeping a close eye on consumer spending habits as this activity represents a hefty 70% of the nation's economic activity. Retail sales slowed from October's strong rate, with November up 0.2% which reflects strong consumer confidence. The auto industry continues to be the unknown piece of the puzzle, and the data for car sales is excluded from this consumer spending benchmark. With November posting a positive growth rate, analysts are feeling good about December sales and expect a strong holiday season for retailers.
Inflation continues to rest around the target level of 2% with Novembers' core Consumer Price Index (CPI) coming in at 2.2% growth over last year. This is lower than October's 2.5% rate and higher than the 1.8% at the beginning of the year. This data is in line with expectations and the Fed is expected to announce another 25bp rise in the overnight rate this week. This increase has been expected for some time, and will probably not have much effect on the markets. There is still some ambiguity over whether or not the Fed will continue to raise rates in Q1 of 2019.
The ECB is concerned about a slowing global growth rate and is not expected to raise interest rate levels any time before 2020. There are still concerns over the trade skirmish between the US and China, although ongoing talks are encouraging. Brexit is also unresolved, placing further strain on equity markets, primarily.
This week will see the Fed meeting on Wednesday, which is not expected to yield any surprises. Housing data also comes out this week with Housing Starts on Tuesday and data relating to Existing Home Sales on Wednesday. Durable Goods Orders data is released on Friday, along with the PCE price index data.
This is the last full week of trading before the holiday, and we could see muted trading levels with little change in overall mortgage. Give us a call today at 239-514-2674 with any mortgage questions. NMLS #1743702