Updated on February 20, 2020 10:19:42 AM EST
Yesterday afternoons release of the minutes from the January 29-30th FOMC meeting failed to yield any significant surprises. They showed that Fed members expect the economy to continue to grow at a moderate pace and that their current position on short-term interest rates should remain status quo for the foreseeable future. There was a consensus that the Coronavirus and its impact on the global economies is something that they will stay focused on, looking for an impact on our economy. Overall, there was nothing in the minutes that was alarming or worthy of being joyous about. They had a minimal impact on bond trading and mortgage rates.
Januarys Leading Economic Indicators (LEI) were posted at 10:00 AM ET, revealing a 0.8% increase that exceeded expectations. The rise means the indicators are predicting economic growth over the next several months. That makes the data bad news for bonds and mortgage rates, but the data has had no impact on this morning’s trading.
The week closes tomorrow with the release of Januarys Existing Home Sales report at 10:00 AM ET. The National Association of Realtors will give us this data, which tracks home resales throughout the country. It is expected to show a decline in sales of existing homes, meaning the housing sector softened last month. Ideally, the bond market would like to see a sizable decline in sales because weak housing makes broader economic growth more difficult. Since long-term securities such as mortgage bonds tend to thrive during weaker economic conditions, weak housing numbers would be good news for mortgage rates.
©Mortgage Commentary 2020