Weekly Mortgage Overview: 11/25/2013

With this holiday-shortened week, the bond market will be closed on Thursday. It will reopen on Friday but then close early at 2:00EST.

There are some big name economic reports this week, with Durable Goods, Initial Jobless Claims, Chicago PMI, Consumer Confidence and Consumer Sentiment getting the most attention.

There are also three Treasury auctions this week:
11/25 – 2 year Note.
11/26 – 5 year Note.
11/27 – 7 year Note.

Wednesday is the most important trading day of the week. Many bond traders will react to the data and then take off for the weekend by lunch even though the bond market will remain open until 5:00EST.  So volumes will be thin in the afternoon and on Friday as well. A relatively small block of trades will cause the market to be “skewed.”  This is only temporary. When traders return on Monday in full force, volumes will return to normal levels.

For the week, the downside is limited as many traders will “park” their funds into the safe-haven of bonds to avoid any international volatility while they are off for the holiday. Durable Goods Orders is very key on Wednesday. There has been some very strong volatility with MBS after the last couple of reports. A strong report will cause a sell-off….a weak report and MBS will rally.

What is on the agenda for this week?