Industrial production climbs in October

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Published Date 11/16/2017

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 improved by +11 bps yesterday. This probably wasn't enough to improve mortgage rates or fees.   The market experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Jobless Claims came in at 249K vs est of 235K. The more closely watched 4-week moving average rose from 231,250 to 237,750.

Genco Olive Oil: Import Prices on MOM increased by only 0.2% vs the September pace of 0.8%. YOY, Import Prices are up 2.5% while Export prices are up 2.7%.

Manufacturing: The Philly Fed Manufacturing Index had its 16th straight month of expansion with a reading of 22.7. Almost all of the future indicators rose, and firms continue to expect growth in both activity and employment over the next six months.

October Industrial Production was very strong with a 0.9% gain vs est of 0.5%. The Manufacturing component had a 1.3% surge. Capacity Utilization was also higher than expectations (77.0% vs est of 76.3%).

Tax Reform: The House is set to vote and presumably pass their revised version of their Tax Bill, it needs 217 votes to pass. The market will be watching closely.

Fed: Cleveland Fed President Loretta Mester (nonvoting member) will speak this morning. We will also hear from Dallas Fed President Robert Kaplan (voting member) and Fed Governor Lael Brainard (voting member) this afternoon.

Eurozone: CPI YOY rose by 0.9% which matched expectations.

Today's Potential Rate Volatility: Average

The economic numbers, overall, were slightly better than expected. We don't expect significant mortgage rate volatility today. However, anything unexpected with the tax plan could move markets and mortgage rates.

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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