Weekly Mortgage Overview: 1/4/2021

By January 4, 2021Mortgage Overview

What’s on the Agenda for this Week?


Happy New Year! The year opens in a new and higher trading channel, but how long can it stay in it?

Three Things

The three areas that have the greatest ability to impact backend pricing this week are: (1) Geopolitical, (2) Coronavirus and (3) Jobs, Jobs, Jobs.

(1) Geopolitical: The most important event of the week is the results of the Georgia run-off Senate race as it will determine which party will have control of Senate, which is a very large factor in policies that can impact taxes, stimulus and the economy for the next several years. Also, the Electoral votes will need to be accepted by Congress this week and there will be some drama with that.

(2) Coronavirus: The global impact on the macro economy continues to expand negatively. The markets were hoping that the vaccine rollout would point to economies reopening soon but they are now pricing that out as many people are choosing not to be vaccinated (in some hospitals in the U.S. as much as 50% of the staff refuse to get the shot). The original goal was to have 20 million vaccinated by the end of 2020 but only 4.3 million have been. Meanwhile, many states are seeing new record highs in the number of cases and hospitalizations, and colleges and K-12 schools are pushing back in-person classes (a key factor in parents going back to work). 300K additional U.S. cases have been released after holiday delays, and Scotland, Germany and Greece announce new lockdowns.

(3) Jobs, Jobs, Jobs: This is a big week for jobs and wage data with ISM Manufacturing and Services Employment Components, ADP Private Payrolls, Challenger Job Cuts, Initial Weekly Jobless Claims, Non-Farm Payrolls, Average Hourly Earnings and the Unemployment Rate.

The Talking Fed

Here is this week’s schedule:

01/04: Charles Evans, Raphael Bostic, Loretta Mester
01/05: John Williams
01/06: FOMC Minutes
01/07: Patrick Harker, James Bullard

Market Wrap-up

Domestic Flavor

Construction: November Construction Spending matched market forecasts of a monthly gain of 0.9%. October was revised higher, from 1.3% to 1.6%.

On Deck for Tomorrow: Georgia Senate runoff election results, ISM Manufacturing, Total Vehicle Sales.