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Mortgage rates are sitting higher than their December lows, and will become more and more volatile as the year comes to a close.

This is Holiday Season and more and more traders will be taking leave with each passing day.  This removes liquidity from the market because there are fewer buyers to match with sellers, and fewer sellers to match with buyers.

With fewer traders, it is much less likely that a person who wants to buy at a certain price will find somebody who wants to sell at a certain price.  Therefore, mortgage bonds (and interest rates) may move a lot more sharply than we're used to seeing.

Not helping matters: this is a big week for economic data with PPI, GDP and a host of others.  But Friday is the biggest day.

On Friday, the government will release the Personal Consumption Expenditures Index, the Fed's self-professed favorite measure of inflation.  This is a Market Mover, but there will be far fewer market players come Friday morning -- many people will have already left for the weekend.  Myself included.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.