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MARKET FOCUS: DURABLE GOODS ORDERS, JOBLESS CLAIMS, AND PENDING HOME SALES

TODAY’S MORTGAGE RATE SUMMARY

HOW RATES MOVE:

Conventional and Government (FHA and VA) lenders set their rates based on Mortgage-Backed Securities (MBS) pricing, 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 various 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: HIGHER

Rates are moving slightly higher so far today.  The MBS market worsened by -15 bps yesterday. This caused rates or fees to mostly move higher for the day.  Rate volatility was low yesterday.

TODAY’S RATE FORECAST: HIGHER

Housing: The Pending Home Sales Index (which is not written contracts but a sample size) contracted by -4.4% in April, which was much lighter than the forecasts for a gain of 0.8%.

Manufacturing: April Headline Durable Goods Orders were lighter than expected (-1.3% vs. estimates of +0.7%). Ex Transportation, they were better than expected (1.0% vs. estimates of 0.8%).

Jobs: Initial Weekly Jobless Claims were better than expected (406K vs. estimates of 425K). The more closely watched 4-week moving average dropped to 458,750. Continuing Claims were 3.642M vs. estimates of 3.680M.

GDP: The first revision to the 1st QTR GDP was unchanged at 6.4%, the market expected a slight upward revision to 6.5%. Prices Paid (a key measure of inflation) was revised higher from 4.1% to 4.3%.

The Fed: Today, we hear from voting member and Fed Governor Randall Quarles (for the second day).

Treasury Dump: We have a 7-year note auction today at 1:00 pm ET.

TODAY’S POTENTIAL RATE VOLATILITY: AVERAGE

With the economic data today and technical support, the rate market is pushing higher on moderate volatility. We expect that to remain the case through the day. Tomorrow we have critical inflationary data, including the PCE, that could cause rates to move 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 Ken at Mortgage-Boss.com.

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