Three things that can impact rates this week

Published Date 10/11/2022

TODAY’S MORTGAGE RATE SUMMARY

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.

RATES CURRENTLY TRENDING: NEUTRAL

Mortgage rates are moving sideways today. The MBS market worsened by -31 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

THIS WEEK’S RATE FORECAST: HIGHER

These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Central Banks, 3)The Fed

1) Inflation: We get very key inflationary readings out of Producer Prices, Consumer Prices and Import and Export Prices. The markets are expecting the Core (ex food and energy) CPI YOY to rise from 6.3% to 6.5% but also expect the headline CPI to crest and drop from 8.3% to 8.1%. The higher these numbers are, the worse it is for rates.

2) Central Banks: The Bank of England announced that it would widen the scope of its daily gilt purchase operations to include purchases of index-linked gilts. The IMF is meeting this week in New York. The lender’s chief economist, Pierre-Olivier Gourinchas, wrote “The worst is yet to come, and for many people 2023 will feel like a recession”. Also the IMF lowered their global GDP forecast next year to only 2.7% which is the lowest level since 2009.

3) The Fed: The bond market continues to try to hedge ahead of the next several FOMC meetings. We get the Minutes from the last FOMC meeting on Wednesday.

Treasury Sales: Here is this week’s schedule, Thursday’s 30 year bond auction is the most important for rates:

10/11 3 year note

10/12 10 year note

10/13 30 year bond

THIS WEEK’S POTENTIAL RATE VOLATILITY: HIGH

This morning markets are mostly treading water as they move on statements out of the Bank of England. Volatility will be high this week with inflation data.

BOTTOM LINE:

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.Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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