After this blog was originally published, President Trump announced that he and Congress have reached a deal to temporarily end the government shutdown while working on a long-term funding solution.

The signs of a slowdown are plentiful. China's economic growth has slowed to a level they haven't seen in nearly three decades, the United Kingdom's political parties continue to spar over a Brexit plan that is two years in the making and the United States is embroiled in its own political battle with the government shutdown extending past the one month mark.

Does all of this add up to a global recession? Not necessarily. However, many economists believe that this combination of factors, along with the US tariffs on China, will contribute to a sharp slowdown in world economic growth.

China's slowing growth is the main focus for the United States. Trade talks were seemingly going well but this week Commerce Secretary Wilbur Ross told CNBC that the two countries are "miles and miles away" from reaching a trade deal. Next week a formal delegation from China will visit the US to discuss a potential formal deal.

The oil industry is another factor as prices once again slumped this week. Growth forecasts from the International Monetary Fund were dismal at best and questions about whether Saudi Arabia truly is going to cut production only fueled the downturn.

Stocks and Fed respond

Patience and data continues to be the mantra for the Federal Reserve as they are not expected to raise rates when they meet next week. Fed officials seem to concur that relatively low inflation is helping them remain patient with their rate hike schedule in 2019, making it more gradual instead of on "automatic pilot."

Strengthening the Fed's position on patience was another strong jobs report from the Labor Department. US weekly jobless claims fell once again and are at the lowest level since 1969. Claims for state unemployment benefits dropped by 13,000 for the week ending Jan. 19, settling in for a seasonally adjusted 199,000 applications. That's just above the previous low of 197,000 applications in November of 1969.

However, California was among six states where the Labor Department said claims were estimated last week because of the Martin Luther King Jr. holiday. Therefore it's likely the drop in claims will be revised higher once the data is confirmed.

Meanwhile equities remain reactionary, ebbing and flowing depending on the headlines concerning the US and China trade talks. Fourth quarter earnings reports released this week helped keep markets from taking too big a hit.

The 10-year Treasury note yield spiked last week to 2.79 percent on the rally in equities, but has come back down this week to a low of 2.70 percent. Equities faded after last week's cheer on expectation of a deal between the US and China.  

As of this morning, the 10-year Treasury note was trading at 2.75 percent. For now, we can expect a trade off of equity gains for treasury losses or vice versa.

The good news in all of this is that mortgage rates won't move too much higher until the market sees a real pickup in the economy and gets the Fed on the move again. I don't expect that to happen any time soon. This should be great news for borrowers as we are edging closer to the spring buying season.

Fannie, Freddie one step closer to privatization

Another move this week by the Federal Housing Finance Association indicates that Fannie Mae and Freddie Mac are moving closer to being released from government control.

Acting FHFA head, Comptroller of the Currency Joseph Otting, has told the courts that the FHFA will not defend its constitutionality. Last year, the fifth circuit court of appeals ruled that the FHFA, which controls Fannie and Freddie, was not constitutionally structured. Mel Watt, the former head of the FHFA, appealed that ruling. Since Otting has taken over, he has said they will drop the appeal and concede to the previous ruling.

This seems to coincide with the potential proposal being worked up by President Trump that would release Fannie and Freddie from government control.

Home sales, mortgage apps and refi's all slump

The spike in mortgage applications earlier this month was short lived. Data released this week by the Mortgage Bankers Association shows that mortgage applications fell by 2.7 percent week-over-week.

Joel Kan, the MBA Vice President of Economic and Industry Forecasting, says a lot of the moderate drop has to do with a better than expected economy. Kan said, in part, "borrowers saw increasing rates for most loan types last week, as better-than-expected unemployment claims, easing trade tensions and stabilization in the equity markets ultimately led to a rise in Treasury rates."

Refinances also dropped by 5 percent from the previous week, but Kan mentioned that the refi index is still right around the levels we saw last spring.

Existing home sales took a big tumble dropping 6.4 percent month-over-month. Economists polled by Reuters had predicted they would drop, but only by 1 percent.

Looking at the bigger picture, existing home sales have fallen 10.3 percent from a year ago. Looking at 2018 itself, existing home sales were the worst they've been since 2015, falling 3.1 percent to 5.34 million units.

Home prices are still growing but at a much slower pace than we've seen. December's data shows the median home price at $253,600, an increase of 2.9 percent. That's the slowest home price growth rate we've seen since 2012.

The big issue with getting a grasp on where housing is going is the prolonged government shutdown. The data concerning new home starts is delayed because of a lack of funding for the department that does that research.