Market Perspective

Focus on Georgia Election


Overview: An increased chance of Democratic control of the Senate and stronger than expected manufacturing data were negative for mortgage markets over the past week. Although rates increased slightly, they remain near record-low levels and are roughly a full point lower than a year ago.

The pivotal runoff election for two Senate seats in Georgia took place on Tuesday. As the vote counting continues on Wednesday, it appears likely that Democrats will win one or both of the races. If the Democrats pick up both seats, they will gain control of the Senate. This outcome may be viewed as negative for mortgage rates because investors expect that there will be more government spending from the Democrats than from the Republicans. Increased government spending would require more debt to be issued to fund the spending, which would cause bond yields to rise.


The most significant economic report released over the past week revealed unexpected strength in the manufacturing sector. The Institute for Supply Management (ISM) Manufacturing Index jumped to 60.7, well above the consensus forecast of 56.5, and the highest level since August 2018. Readings above 50 indicate an expansion in the sector.

ISM Manufacturing Index

Week Ahead

January 7 — ISM Services Index

January 8 — Employment Report

January 13 — The Consumer Price Index (CPI)

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