Wednesday, January 29, 2020

Market Commentary

Updated on January 29, 2020 10:35:18 AM EST

There is no relevant economic data set for release this morning. It appears bonds are reacting to news that cases of the coronavirus have surpassed the SARS epidemic from 2002-2003. It is fueling speculation that there will be a negative impact on the global and domestic economies. However, even though this is good news for bonds and mortgage rates, stock traders don’t share the same level of concern that bond traders have. Hence, the relatively strong open in both stocks and bonds this morning.

The first FOMC meeting of the year is wrapping up at 2:00 PM ET this afternoon. There is a wide consensus that Fed Chair Powell and friends will not make a change to key short-term interest rates. It is more likely that the post-meeting statement will be the cause of any afternoon volatility. It is worth noting that every FOMC meeting is now followed by a press conference with Chairman Powell. Traders will be looking for hints as to when the next rate move is likely to come and if the Fed plans on making changes to their balance sheet program. It will be an afternoon event that could have a big impact on the financial and mortgage markets if there are any surprises.

There will be an update to this report shortly after the markets have an opportunity to react to the FOMC events.

Tomorrow morning brings us a major piece of economic data with the release of the initial 4th Quarter GDP reading. This index tells us the growth rate of the economy during the October, November and December months of last year. It will be addressed in this afternoon’s revised commentary.

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