December 23rd, 2009 9:08 AM by Mel Samick
The first report of the week was the final revision to the 3rd Quarter GDP. It showed a downward revision to 2.2% form 2.8% that was announced last month. This means that the economy grew at a slower pace during the third quarter than previously thought. That can be considered good news for bonds and mortgage rates, but since this data is old at this point and we will get the initial reading of this quarter next month, its impact on trading and mortgage rates has been minimal. Had we seen this much of a variance in either the initial or first revision, mortgage rates likely would have moved lower as a result of the news.November's Existing Home Sales report was released late this morning. The National Association of Realtors reported that home resales rose 7.4% last month, exceeding forecasts by a wide margin. This follows a 10% spike in October, indicating that the housing sector is stronger than many had thought. However, it is believed that the biggest force behind the sales is the first time homebuyer tax incentive. A one time credit such as that tends to temporarily boost home sales and is not a reliable indicator of underlying strength. In other words, where will sales be once the credit is no longer available? That remains to be seen, but stock traders are taking the news as positive, which has made bonds less attractive to investors.