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THREE THINGS THAT CAN MOVE RATES THIS WEEK

THIS WEEK’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 trending sideways this morning.  Last week the MBS market improved by +9bps.  This caused rates or fees to remain unchanged for the week on low volatility.

THIS WEEK’S RATE FORECAST: NEUTRAL

Three Things: These are the three things that can move rates this week 1) Inflation, 2) The Fed, and 3) Central Bank.

1) Inflation: The Fed has all but ignored all of the inflationary data over the past month for two reasons. None of it is their key measure of inflation, and well…its all “transitory” anyway. But on Friday, we do get their key measure of inflation with the Core (Ex-food and energy) PCE YOY reading which is expected to be well above 2%. This is the most important release of the week.

2) The Fed: We will hear from many voting members this week as we approach their media “blackout” period where members do not speak about policy leading up to the next FOMC meeting.

  • 05/24 Brainard, Mester, Bostic, George
  • 05/25 Quarles
  • 05/26 Quarles
  • 05/27 Fed’s Balance Sheet

3) Central Bank: We get key interest rate decisions from the Bank of Indonesia, Bank of Korea, and the Reserve bank of New Zealand.

Treasury Dump: Here is this week’s Treasury auction schedule:

  • 05/25 2 year note
  • 05/26 5 year note
  • 05/27 7 year note

THIS WEEK’S POTENTIAL VOLATILITY: AVERAGE

Rate markets have an opportunity to be very volatile on Friday with the inflation data denoted above. If inflation comes in hotter than expected, look for rates to spike on high volatility.

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 to discuss it with him.

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