Market Moving News – January 12

Here's a breakdown of each key event this week and its potential impact on the bond market and mortgage rates:

1. Markets React to Trump's Call for 10% Credit Card Rate Cap - TODAY
   • Expectations: Traders may react with volatility as the proposal could indicate a shift in monetary policy focus.
   • Impact: If the market sees this as a move to control inflation, bond yields might decrease, leading to lower mortgage rates. However, uncertainty could initially cause rates to rise. So, it didn’t move the needle. The bond market is flat.
2. December CPI Inflation Data - Tuesday
   • Expectations: Investors will closely watch this data for signs of inflation trends.
   • Impact: Higher-than-expected CPI could lead to increased bond yields as investors anticipate rate hikes from the Fed, which could push mortgage rates up. Conversely, lower inflation could stabilize or lower rates. Current expectations are that CORE CPI will be unchanged or increased by 0.1%.
3. October New Home Sales Data - Tuesday
   • Expectations: Analysts will look for trends in housing demand and supply.
   • Impact: Strong sales figures may suggest a robust economy, potentially driving bond yields higher (and mortgage rates up). Weak data might signal softness in the housing market, leading to lower rates.
4. November PPI Inflation Data - Wednesday
   • Expectations: Similar to CPI, this will provide insight into producer-level inflation.
   • Impact: A higher PPI can boost bond yields in anticipation of Fed tightening, resulting in higher mortgage rates. A lower PPI may have the opposite effect.
5. US Supreme Court Tariff Ruling Expected - Wednesday
   • Expectations: The ruling could impact trade policies and economic growth.
   • Impact: A ruling favoring tariffs could create uncertainty, potentially driving bond prices up (lower yields). If markets view the ruling as favorable for growth, yields might rise, increasing mortgage rates.
6. January Philly Fed Manufacturing Index - Thursday
   • Expectations: This index will provide insights into manufacturing health in the region.
   • Impact: A strong reading could push bond yields higher as it reflects economic strength, leading to higher mortgage rates. A weak report could lower yields and mortgage rates.
     

Overall Impact: The week ahead is indeed expected to be volatile, with the potential for significant movements in the bond market and mortgage rates depending on the outcomes of these economic indicators and political events. Watch closely to the right headlines.

‍