Updated on December 13, 2019 10:11:50 AM EST
Yesterdays 30-year Bond auction actually went very well. Investor demand for the securities was stronger than we had expected. That would normally be good news and help boost bond prices and improve mortgage rates. However, the massive unexpected sell-off we saw in bonds made the auction results irrelevant. The bond market and mortgage rates worsened as the afternoon went on despite the strong auction.
Novembers Retail Sales data was posted at 8:30 AM, revealing a 0.2% increase in consumer level sales. This was noticeably softer than the 0.5% increase that was expected, indicating consumers spent much less than many had thought. Because consumer spending makes up over two-thirds of the U.S. economy, the weaker number is good news for bonds and mortgage rates.
We are seeing some volatility in bonds this morning as a result of news and a press conference out of China that seem to support the announcement that progress is being made towards a trade deal with the U.S. Yesterday’s sell-off was likely an overkill, allowing bonds to recover some of those losses this morning. Now that this issue should be behind us for the time being, we hopefully will not see as much volatility on related news.
Next week brings us more economic data than this week did but compared to this weeks highly important data, next weeks is considered to be only moderately important. Monday has nothing scheduled, meaning we can expect weekend news and stock movement to drive bond trading and mortgage rates early next week.
©Mortgage Commentary 2019