MARKET NEWS

Tuesday's bond market has opened flat despite much stronger than expected economic news. The stock markets are reacting favorable to the same data, but are showing only minor gains. The Dow is currently up 17 points while the Nasdaq has gained 6 points. The bond market is currently nearly unchanged from Friday's close, which means we will likely see a slight increase in this morning's mortgage rates due to weakness in trading late Friday. The financial markets were closed yesterday due to the Christmas Day holiday.

The Conference Board posted this week's only monthly economic data late this morning with the release of December's Consumer Confidence Index (CCI). They announced a much stronger than expected reading of 64.5, meaning that consumers were much more optimistic about their own financial situations than many had thought. It was also the second consecutive month of a large jump in confidence. This makes the data bad news for the bond market and mortgage rates because rising consumer confidence usually translates into stronger levels of consumer spending, effectively fueling economic growth. Since long-term securities such as mortgage-related bonds are more attractive to investors in weaker economic conditions, today's results are considered negative for mortgage pricing.

With little economic data being posted this week, the Labor Department's weekly unemployment numbers may help influence the markets and mortgage rates more than usual. They are expected to show Thursday that 368,000 new claims for unemployment benefits were filed last week, which would be an increase from the previous week. We usually don't worry too much about this data because it tracks only a single week's worth of new claims, but we should probably pay a little more attention to this particular release as it could impact mortgage rates slightly.

The bond market will close at 2:00 PM ET Friday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed Monday in observance of the New Year's Day holiday. Everything will reopen Tuesday morning for regular hours.

Overall, today's economic release was the key event of the week, but we could see volatility any day. The thinnest trading will probably take place the latter part of the week as traders head home for the holiday. Despite last week's shortened schedule, we saw plenty of movement in mortgage rates. This week likely will be the same as investors look to make year-end adjustments to their portfolios. Accordingly, I recommend keeping in contact with your mortgage professional if still floating an interest rate and closing in the immediate future.