Housing Momentum Continues

Investors reacted this week to major economic data, Covid headlines, and negotiations in Congress for an additional aid package. Despite the wide range of news, however, it was a relatively quiet week for mortgage markets, and rates remained near record low levels.

While the solid rebound from unprecedented job losses caused by the partial shutdown of the economy has continued, the latest data released on Friday fell short of expectations. In November, the economy gained 245,000 jobs, below the consensus forecast of 450,000. Strength was seen in transportation, professional services, and health care. The economy has now recovered more than half of the 22 million jobs lost in March and April.

Another significant economic report released this week, the national manufacturing index from the Institute of Supply Management (ISM), was in line with expectations. In November, ISM came in at 57.5, the sixth straight month of readings above 50, meaning that the sector is expanding. Since many consumers are spending less money on travel and leisure activities due to the pandemic, they are buying more goods, which has boosted manufacturing activity.

Looking ahead, investors will continue watching Covid case counts, progress on vaccines, and negotiations for additional government stimulus. Beyond that, the Consumer Price Index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services. The next European Central Bank meeting also will take place on Thursday.

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