Market News: Coronavirus, Jobless Claims, And Central Bank Moves

March 19, 2020

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 slightly higher at the moment. The MBS market worsened by -103 bps yesterday. This caused rates or fees to move higher. Mortgage rates, like the overall market, continue to show extreme volatility.

TODAY’S RATE FORECAST: NEUTRAL

Jobs: Weekly jobless claims didn’t surprise, claims increased 70K to 281K, this is the first of more claims that will follow. Claims at a 2 yr high; next week’s claims will likely exceed 360K.

Central Bank: ECB President Christine Lagarde announced another 750B purchase program.”This new Pandemic Emergency Purchase Programme (PEPP) will have an overall envelope of €750 billion. Purchases will be conducted until the end of 2020 and will include all the asset categories eligible under the existing asset purchase program.” BoE governor Andrew Bailey said that the central bank stands ready to pump unlimited amounts of money into the economy.

Coronavirus: These are the most recent headlines that bond traders are focusing on this morning.

JPM estimates 2nd Quarter GDP forecast to -14%, but then a very sharp recovery of +8% in Q3 and +4% in Q4
2nd US Congresswoman has Corvid-19
NYSE to close the trading floor on Monday and move to all electronic off-site trading
Iranian Health Ministry spokesman said that one person dies every 10 min in Iran from the Corvid-19 virus and that every hour 50 more are infected
US Cases now at least 9,159, Deaths at 150
Spain jumps to 17,147
Italy extends country’s lockdown past April 3 as death toll jumps by 475 to 2,978
With Italy’s death toll at 3,000 and rising, China’s nationwide death doll of 3,231 is considered even more of a lie

TODAY’S POTENTIAL RATE VOLATILITY: HIGH

Yesterday and once again today, we see significant movement in the rate markets. The market volatility is not a surprise to anyone. We anticipate the same volatility today as more news comes out about the coronavirus and the government’s interventions.

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