- 05 April
How Rates Move:
Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I’m among few mortgage professionals who have access to live trading screens during market hours.
Rates Currently Trending: NEUTRAL
Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -13 bps. This causes rates to mostly move sideways for the week. We saw moderate to high volatility through most of the week.
This Week's Rate Forecast: NEUTRAL
Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) The Fed, 2) Services, and 3) Inflation.
1) The Fed: We will hear from several key members of the Federal Reserve, including Powell this week. We will also hear from Ex Chair and Current Treas Sec Yellen. The bond market will be very sensitive to commentary related to inflation and rates. Here is this week's schedule:
• 04/05 Treasury Sec Yellen
• 04/07 Evans, Barkin, Minutes from last FOMC Meeting
• 04/08 Bullard, Fed Chair Powell, Fed's Balance Sheet
2) Services: We saw a huge jump in jobs last Friday in the Services sector. Monday's ISM Services PMI will get a lot of attention from traders as this represents 2/3 of our economy.
3) Inflation: Friday's Producer Price Index (PPI) has been steadily growing but has yet to spill over into the Consumer Prices. However, that cannot last, and it's expected that the YOY Core number could reach a very hot 2.7%.
This Week's Potential Volatility: AVERAGE
Rate markets are trading sideways today on moderate volatility. We don't expect a lot of movement in rates this week. Rate markets will be paying close attention to the PPI reading along with Yell's and Powell's comments this week.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.