Rent and gas prices help push inflation higher

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Published Date 9/14/2017

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 finished unchanged yesterday.   The market experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Claims were lower than expected (284K vs est of 300K) but the more closely watched 4 week moving average increased to 263,250. For the next month or two...this report gets a hall pass as we expect a lot of claims due to displaced workers and companies shut down due to Harvey and Irma.

Inflation: Today's Consumer Price Index (CPI) did show some upward momentum and came in a little higher than market expectations. The Headline CPI YOY number hit 1.9% vs est of 1.8% and is a nice pick up from July's pace of 1.7%. The Core CPI YOY hit 1.7% vs est of 1.6%.

China (number 2 economy): Very high readings out of China (several times higher than any data in the U.S.) but they were lighter than expected. Their Retails jumped by 10.1%, but the market wanted 10.4%, Industrial Production grew at a 6.0% pace, but the market wanted 6.6%.

Japan (number 3 economy): Their Industrial Production matched market expectations of -0.8% on a MOM basis and +4.7% on a YOY basis.

Great Britain (number 5 economy): The Bank of England kept their key interest rate (0.5%) along as well as their asset purchase program. The vote was 7-2. However, the market is reacting to their policy statement that "All MPC members continue to judge that, if the economy follows a path broadly consistent with the August Inflation Report central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than current market expectations. " Which is a fairly "hawkish" tone that the markets should prepare for a hike soon.

Switzerland (number 19 economy): The SNB left their key interest rate negative with a -0.75% rate. Nice.

Today's Potential Rate Volatility: Average

The economic data denoted above is pretty positive and is enough to push mortgage rates higher. However, North Korea threatening Japan with annihilation is helping to keep a lid on mortgage rates. The biggest factor today for mortgage rate volatility is North Korea.

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.

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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.

Daniel Harwood

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Email: daniel.t.harwood@gmail.com

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