Market Focus: Consumer Prices, FED, And Coronavirus

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 so far today.  The MBS market worsened by -1 bps yesterday. This caused rates or fees to mostly move sideways for the day. The rates experienced low volatility yesterday.

TODAY’S RATE FORECAST: NEUTRAL

Inflation: The January Consumer Price Index was a little hotter than expected with the Headline CPI YOY at 2.5% vs. est. of 2.4% and the Core (ex-food and energy) YOY at 2.3% vs. est. of 2.2%.

Jobs: Initial Weekly Jobless Claims were lighter than expected (205K vs. est. of 210K). The more closely watched 4-week moving average remained at 212K.

Fed: Today, we hear from Robert Kaplan and John Williams. Also, Fed Governor Nominee Judy Shelton will be grilled by Senate Banking Committee on the way through her confirmation process.

Treasury Dump: We have our 30-year bond auction at 1:00 am ET today.

Germany: CPI YOY 1.7% vs. est. of 1.7%

TODAY’S POTENTIAL RATE VOLATILITY: LOW

Rates once again yesterday moved sideways on muted volatility. We’re looking for the same today. While cases of the coronavirus continue to push higher, the risk-on trade (buying treasuries) seems to have abated.

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