While there was no shortage of significant economic news on several fronts this week, including an increase in global cases of the coronavirus, major US economic data, and a European Central Bank meeting, mortgage markets held relatively steady. It appears that many investors have been staying on the sidelines ahead of Tuesday’s election, and mortgage rates remained near record low levels.
Gross domestic product (GDP) is the broadest measure of economic activity, and quarterly readings above 10% annualized are extremely rare. Due to the partial shutdown of the economy, however, GDP declined a stunning 31.4% annualized during the second quarter of this year. The latest report released on Thursday revealed that it reversed and increased at a comparable rate of 33.1% annualized during the third quarter, which was close to the expected levels. Early estimates for the fourth quarter vary widely.
Following four straight months of impressive gains, new home sales in September dropped 4% from August, which was below the consensus forecast for a small increase. Despite the minor dip, however, new home sales remained near the best levels since 2006 and were a massive 32% higher than a year ago.
Thursday’s European Central Bank (ECB) meeting produced no surprises. Officials noted that the economic risks favored the downside and that they will be closely watching incoming data. As expected, however, they indicated that any necessary policy changes will be announced at the next meeting in December.
Looking ahead, it’s almost hard to imagine a bigger week for potentially market moving news. Of course, by far the most significant event will be Tuesday’s election, and it’s not clear when the final results will be known. In addition, the next Fed meeting will take place on Thursday. For economic data, the key monthly Employment report will be released on Friday. Before that, the ISM national manufacturing index will come out on Monday and the ISM national services index on Thursday. Investors also will remain focused on medical advances to fight the coronavirus.
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Raleigh Mortgage Group, Inc.
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