Rate Volatility Spiking On Coronavirus News

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 -5 bps yesterday. This caused rates or fees to move sideways for the day. The rate markets experienced high volatility yesterday.

TODAY’S RATE FORECAST: NEUTRAL

Housing: January Pending Home Sales MOM was up 5.2% vs. est. of 2.2%.

Jobs: Initial Weekly Jobless Claims hit 219K vs. est. of 212K. The more closely watched 4-week moving average moved up by 25K to 209,750.

GDP: We got the second revision to the previously released 4th QTR GDP, and it remained at 2.1%.

Manufacturing: The January Durable Goods Orders were much better than expected (-0.2% vs. est. of -1.5%), and the December data was revised upward from 2.4% to 2.9%. Ex Transportation, orders were up +0.9% vs. est. of only 0.2%.

Treasury Dump: We have our 7-year Treasury note auction at 1:00 pm ET today.

Coronavirus: As expected, the Cov-19 story continues to get worse. Here are the latest headlines.

• President Trump appointed V.P. Pence as the Coronavirus Czar.
• Congress is looking to approve a spending package in the range of $2 to $8 billion dollars to fight the virus.
• California has the first confirmed coronavirus case in the U.S. that contracted it organically and had zero travel and zero contact with anyone that has recently traveled overseas.
• Japan and China close ALL schools nationwide.
• Cases in South Korea continue to shoot straight up with 171 new cases (the largest amount in a single day), bringing the total to 505, A U.S. soldier has caught the virus in South Korea.
• Saudi Arabia has halted pilgrimages to Islam’s holy sites – known as the Hajj – that are a mandatory practice for Muslims, an unprecedented decision.
• Pakistan, Greece, North Macedonia, Georgia, Algeria, Norway, and Romania all have joined the list of confirmed cases.

Eurozone: Consumer Confidence -6.6 vs. est. of -6.6, Economic Sentiment 103.5 vs. est. of 102.08

TODAY’S POTENTIAL RATE VOLATILITY: HIGH

Stock and rate market volatility is through the roof today. While rates are mostly flat at this moment, that can quickly change. Markets are trying to digest what the real economic impact will be from the coronavirus. The assessments change from hour to hour as new information unfolds. Look for rates to continue to be volatile throughout the week.

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