Overview: While the trade headlines and economic data caused some daily volatility, there was little change in the investor outlook in either area over the past week, and mortgage rates ended very close to the levels seen before the Thanksgiving holiday.

Two monthly reports put out by the Institute for Supply Management (ISM) are closely watched by investors, partly because they offer some of the most current data on economic activity available. While they had little lasting impact on mortgage rates, both of these reports declined more than expected this month. The ISM Services Index dropped to 53.9, and the ISM Manufacturing Index fell to 48.1. Readings above 50 indicate an expansion in the sector, meaning that services are still growing, whereas manufacturing is contracting.

One big reason the manufacturing sector has been struggling this year has been the decline in global economic activity caused by the increased trade tensions between the U.S. and China. The recently imposed tariffs and other barriers to trade have raised the cost of imports and exports, reducing the quantity. News indicating progress toward reaching a trade deal has been negative for mortgage rates, while obstacles or delays have been positive.

Over the past week, investors continued to be whipsawed by conflicting headlines about the level of progress in the trade negotiations. Early in November, the two sides suggested that they were close to signing a limited trade agreement. On Tuesday, however, President Trump said that it might be better to wait until after the 2020 election to make a deal with China. The next day, it was reported that officials are still moving forward toward an agreement.

Week Ahead

December 6 — Employment Report

December 11 — Consumer Price Index (CPI)

December 11 — Federal Reserve meeting