Three things that could impact rates this week

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Published Date 11/27/2023

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 getting some mild support today. The MBS market worsened by -15 bps last week. This was not enough to increase mortgage rates or fees. The market experienced moderate volatility last week.

This week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) The Fed and 3) Manufacturing.

1) Inflation: We get the Fed's key measure of inflation, PCE and Core PCE on Thursday. YOY, this is expected to move lower. The stronger this reading is MOM, the worse it will be for rates. The weaker it is, the better it will be for rates.

2) The Fed: We will get the Fed's Beige Book on Wednesday and will hear from Fed Chair Powell prior to next week's media blackout from the Fed leading up to their December FOMC meeting.

3) Manufacturing: Wet a lot of manufacturing news this week with the Richmond Fed Manufacturing Index, Chicago PMI and the ISM Manufacturing PMI.

Treasury Auction: Here is this week's Treasury note auction schedule:

11/27 2 year and 5 year notes.

11/28 7 year note.

This week's Potential Rate Volatility: High

This morning markets are getting some support as traders return from the holiday weekend. Volatility has started at moderate to high levels and will increase with the inflation data.

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.

Source: TBWS

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