The Fed’s favorite inflation indicator PCE matches expectations

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Published Date 11/30/2023

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 under pressure today. The MBS market improved by +26 bps yesterday. This may have been enough to decrease mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Housing: The October Pending Home Sales Index changed by -1.5 versus estimates of -2.0 on a MOM basis.

Inflation: Headline October PCE was flat on a MOM basis, versus estimates of 0.1%. YOY it was up 3.0% versus estimates of 3.0%. Core (ex food and energy) PCE was up 0.2% which matched expectations. YOY, it increased by 3.5% which also matched expectations.

The Consumer: October Personal Incomes increased by 0.2% versus estimates of 0.2% and Personal Spending was the same story at 0.2%.

Oil: OPEC+ announced a production cut of 1M barrels per day of extra supply cuts.

Jobs: Initial Weekly Jobless Claims hit 218K versus estimates of 218K. The more closely watched 4 week moving average dropped to 220K. Continuing Claims were ugly, breaking above 1.9M (1.927M).

Manufacturing: The bellwether Chicago PMI surprised to the upside, beating out forecasts by 10 points (55.8 versus estimates of 45.4) and breaking above 50.0 for the first time since July of 2022!

Today's Potential Rate Volatility: Neutral

This morning markets have pulled back from recent gains. Volatility has started at moderate levels with morning data falling largely in line with expectations.

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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