U.S. Weekly Jobless Claims Remain Very Low at 233,000

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Published Date 10/26/2017

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 worsened by -4 bps yesterday. This probably wasn't enough to worsen mortgage rates or fees.   The market experienced very high volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: The Initial Weekly Jobless Claims were very low at 233K vs est of 235K. That dropped the more closely watched 4-week moving average dropped by -9,000 to 239,500.

Location: September Pending Home Sales were flat with a monthly change of 0.0% which was just shy of expectations for a small gain of 0.2%. But it's a nice improvement over August's pace of -2.8%. Of course, this report is showing declines in the Southern regions due to the hurricanes.

Treasury Auction: Today we have our 7-year note which is generally too short of a term to impact the longer end of the yield curve.

Fed: A report by Politico this morning said that "sources" close to the President said that Yellen (uber-dove) and Warsh (uber-hawk) are both out of the running for Fed Chair. And with Cohn said to exit after Tax Reform is done, that leaves Powell (moderate dove on rates, hawkish on regulations and policy) and Taylor (hawkish on rates and policy) left in the running.

Eurozone: The European Central Bank kept their primary interest rate at 0.0% and their deposit rate at -0.4%. They also announced a "dovish" taper of their asset purchase program. 1) They will keep the pace of purchases at 60B until the end of the year (2.5 more months). 2) Then, they will cut that in half down to 30B from January 2018 to September 2018. However, they said they could push that "beyond, if necessary." They also made an additional announcement that they would reinvest the principal and interest payments from maturing holdings back into new bond purchases for an extended period of time.

Today's Potential Rate Volatility: Average

While mortgage rates ended yesterday relatively unchanged, there was a great deal of volatility. Today, we expect mortgage rates to move far less during the course of the day. Of course, an unexpected geopolitical event could push mortgage rates higher or lower (most likely higher).

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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