The mortgage market put in a two day rally early in the week, which brought rates down .125-.25% from their near-term high set on December 28th. Welcome news for those that have watched rates creep higher since the end of November. Later in the week, the market gave back some gains, and rates closed the week only slightly better than where they started.
The economic calendar holds mostly second tier reports until Thursday, when retail sales for December are reported. This report bears watching: A weak number could spark a sell-off in stocks, which may help mortgage rates. A strong report, of course, may have the opposite effect.
Friday brings the Consumer Price Index – a closely watched barometer if inflation (rising prices may indicate inflation, and push mortgage rates higher) – and the Empire State Index – a proxy for national manufacturing sector health out of New York.
All of this, of course, will happen against the backdrop of more than $80 Billion in treasury securities being issued – probably another modern record for weekly supply. Supply which can weigh on mortgage rates like a headwind does a runner, often makes rate improvement tough to come by even if the economic calendar holds reports favorable to lower rates.