Jobless claims jump after Hurricane Harvey

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Published Date 9/7/2017

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: Lower

Mortgage rates are moving lower so far today.  The MBS market worsened by -12 bps yesterday. This probably was enough to worsen mortgage rates or fees.   The market experienced moderate volatility yesterday.

Today's Rate Forecast: Lower

Jobs: Initial weekly jobless claims jumped to 298K vs est of 241K. But over 50K of that jump up was due to Texas (Harvey) and is not a real trend line. The closely watched 4-week moving average moved up to 250,250.

Productivity: This particular release compares the change from 1st to 2nd QTR, so it is some old data. Non-Farm Productivity came in at 1.5% vs est of 1.3%. Unit Labor Costs rose 0.2% vs est of 0.3%.

Fed: Today we hear from Loretta Mester, Raphael Bostic, William Dudley and Esther George. Only Loretta Mester is during trading hours; the rest are in the evening.

Geopolitical: The debt hangover will continue. Treasury Secretary Mnuchin said that he supports the deal that our President and Democrats have cobbled together which "kicks the can" down the road for 3 more months and then we will be right back in this mess again. Nice.

Eurozone: The European Central Bank left their Interest Rate, Deposit Rate, and Asset Purchase programs alone with no changes. ECB President Mario Draghi said "ECB discussion on QE was very preliminary. Various scenarios were discussed as well as various pros and cons. The ECB discussed the QE covered length, size of the plan." He also said that they have discussed increasing the types of assets that they can buy which is interesting as they have already gobbled up most of the inventory.

Spain: The regional parliament of Catalonia agreed to move forward with a referendum vote on October 1 to vote if it should basically break away from Spain and become its own country. This has large implications on the future of the Eurozone as this Northern Province is very wealthy.

Today's Potential Rate Volatility: Average

Mortgage rate volatility should remain relatively low today with mortgage rates moving slightly lower. However, there are a lot of moving parts with North Korea, Irma and other geopolitical events that can move mortgage rates unexpectedly.

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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Daniel Harwood

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