Market Commentary

Updated on January 26, 2022 10:05:05 AM EST

Yesterday's 5-year Treasury Note drew a respectable demand from investors. The benchmarks showed an above average level of interest in the securities compared to other recent sales. Bonds improved slightly after results were posted at 1:00 PM ET, but not nearly enough to improve mortgage pricing.

Today's sole economic report was December's New Home Sales data at 10:00 AM ET. The Commerce Department announced a 12% jump in sales of newly constructed homes last month. This was stronger than expected, indicating growth in the new home portion of the housing sector. Fortunately, this report carries a low level of importance, preventing much of an impact on today's rates.

We also have the adjournment of this week's FOMC meeting to digest later today. There is a strong consensus that Fed Chairman Powell and friends will leave key short-term interest rates unchanged at this meeting. Still, there is a high likelihood of seeing volatility in the markets after it adjourns at 2:00 PM ET. Traders will be looking at the post-meeting statement for clarification of the Fed's plans, particularly regarding when they will start raising short-term rates. Many analysts think that the March meeting is the timetable they will follow. Any indication of it coming at a later date should help boost bonds and lower rates during afternoon trading.

This meeting will be followed by a press conference with Chairman Powell but does not include revised economic projections. This is an afternoon event that could have a big impact on the financial and mortgage markets this afternoon and carry into tomorrow morning.

There are two highly important economic releases scheduled for tomorrow in addition to weekly unemployment figures and the 7-year Treasury Note auction. The high-profile reports are the initial 4th quarter GDP reading and December's Durable Goods Orders. Both can cause noticeable movement in the markets. Look for details on those items in this afternoon's post-FOMC update.

 ©Mortgage Commentary 2022


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