Brian gives an update from Baja. He chats about the price of real estate and the incredibly low taxes on the place that he has been staying over the past few days.

He can still be reached in spite of his location and it’s business as usual with the Brian Manning Team.

David Battany, EVP of Capital Markets at Guild Mortgage will be stepping in to provide a weekly in-depth Guest Market Update while Brian is away, see below.

Our entire team is available to assist you and your buyers!  

Give us a call, text, email, or DM — we’re here!

303-500-3839 //

Friday, December 20

Summary.   Today’s economic data reinforced market estimates of a very low probability of a recession in 2020.   If the US economy grows slowly in 2020, as most economists predict, this would create slight upwards pressure on mortgage interest rates for most of next year.

Market Summary:
Stocks are up again today, with the DOW, S&P 500 and NASDAQ stock indices all at record highs.  The drivers of the stock markets are improving US-China trade relations and the strength in domestic consumer spending.   MBS bonds are mostly flat with the US 10-year Treasury currently yielding 1.912%.

Inside the Markets:
US – China Trade Agreement.   President Trump tweeted today that he “Had a very good talk” with Chinese President Xi Jinping regarding the pending trade agreement.   Yesterday, Treasury Secretary Steven Mnuchin said the trade agreement will be signed in early January, giving the markets confidence that the deal is real and the markets will soon see the written terms.   Unless the markets view that the final trade terms are much less than they expected, stock prices should move up once the deal is signed, bond prices would move lower, and mortgage interest rates would increase.

Consumer Spending  and Income data.   The personal spending data released today showed an increase of 0.4% for the month of November which was what the markets were expecting.    Personal income rose 0.5% in  November, slightly higher than the market’s prediction of a 0.4% increase.   Both numbers were interpreted by investors to reinforce the notion that the US consumer will continue to be the key driver of US economic growth in 2020 and the chances of a recession in 2020 are very low.

GDP Growth Estimates.    Goldman Sachs boosted their estimate of fourth quarter GDP growth to 1.8% based upon today’s strong consumer data.    The majority of Wall Street investment firms are predicting a low probability of a recession in 2020.   A recession is defined as two or more quarters of negative GDP growth.    The US GDP or Gross Domestic Product is a measure of the total value of all finished goods and services produced in the US in a given time period.  

Thursday, December 19

Summary: The markets interpreted the mixed signals from today’s data and the other data earlier in the week to indicate that the US China trade deal is likely to happen and that the US consumer and US home prices will continue to be the strength of the US economy in 2020, with very few economists predicting a recession in 2020.   This creates upward pressure on stock prices and downward pressure on bond prices.   If investor perceptions continue at current levels, we will see slightly rising mortgage interest rates in the next 60 days.

Market Summary

Stocks are up slightly this morning on cautious optimism that the US – China trade agreement will be signed in January.   Bond prices were down slightly at the opening of the market but are up to about flat to yesterday’s closing levels.   Bond prices are getting negative price pressure from the announcement that the Swedish central bank is moving away from negative interest rates and this may cause other European central banks to follow, creating upwards pressure on interest rates worldwide.   The US 10-Year Treasury is currently yielding 1.899 percent.

Market Details

US China Trade Agreement.   The markets are continuing to remain optimistic that a trade deal will be signed in January.   In the last 24 hours China announced that US chemical and oil products will be exempt from tariffs effective December 26.     The African swine virus has killed 25% of all pigs worldwide, and 50% of all Chinese pigs.   China’s top down management style for their agricultural system was very ineffective in stopping the spread of virus within China, and this increases China’s desire for US farm products.    If a trade deal is signed in January, this will push stock prices to new record highs, push bond prices down, and push mortgage interest rates up.
Negative Interest Rates.   Many of the European central banks have reduced their interest rates to negative levels as a means to spur economic investment.    Any investor depositing funds with a European central bank is effectively being charged money for the bank to hold their deposits.   While this does not always translate to consumers getting negative interest rates to buy goods or mortgages, it does drop the actual interest rates very close to zero and in some cases a consumer could receive a true negative interest rate to borrower money.    Economists are concerned that negative interest rates could create economic bubbles if investors use this free money to overly bid up the value of various assets such as real estate, to levels above their true economic value, setting up their economies for future, painful bubble bursts when asset prices fall quickly.   In some areas of Europe, homes have appreciated more than 40% in value in one year.   These levels of appreciation are not sustainable and always will lead to future price corrections which are painful to the investors who bought in at the peak of the bubble.    Sweden was the first European central bank to move from a negative interest rate to a zero interest rate.    The market is evaluating if the other central banks will follow.

Impeachment.   The markets did not react to the impeachment yesterday of President Trump.    This  indicates that the markets do not view that the impeachment process will have any impact to the markets, good or bad, given the expectation that President Trump will not be convicted in the Senate trial which will occur in 2020.

Economic Data.

  • Existing Home Sales.   The November Existing Home Sales data came out 5.35 million units, down 1.7%, slightly worse than the market’s expectations of 0.4% decline.

  • Initial Jobless Claims.  The weekly new jobless claims came in at 234,000 slightly higher than the market’s prediction of 225,000.

  • Philadelphia Fed Manufacturing Index.   This index declined more than the markets expected to net +0.3 level, indicating that the manufacturers surveyed in the Philadelphia Federal Reserve district were only slightly optimistic about the potential  for future growth.   A negative index value would indicate that manufactures are expecting reduced future economic activity.


Brian Manning is a licensed Loan Officer in Colorado Regulated by the CO Division of Real Estate. Licensed in the states of Colorado and Florida, NMLS #324952. The postings on this blog don't necessarily represent the positions, strategies or opinions of any mortgage company or its affiliates. This information is not guaranteed to be accurate and shall not be construed as a guarantee of loan approval. All loans are subject to underwriter approval, and are subject to change without notice.