Rates and the stock market plummet as volatility surges

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Published Date 12/6/2018

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 was closed yesterday.

Today's Rate Forecast: Lower

Jobs: The November ADP Private Payroll hit the lower end of estimates which ranged from 161K to 195K with a 175K reading. Initial Weekly Jobless Claims were 231K vs est of 220K, and even though that is a low number, it is a 6-month high. The Challenger Grey Job Cuts report showed a big drop from 75K down to 53K.

ISM Services: The ISM Non-Manufacturing report was red-hot with a 60.7 reading. The service sector represents more than 2/3 of our economic output.

Trade Imbalance: The Trade Balance was in line with estimates (-$55.5B vs est of -$55.0B).

Productivity: Non-Farm Productivity matched estimates with a 2.3% reading, Labor Unit Costs were a little lighter than expected (0.9% vs est of 1.1%).

Trade War: Canadian Officials have arrested Huawei's global chief financial officer and daughter of the Chinese juggernaut's founder and is said to be in the process of being extradited to the U.S. for charges of breaking the U.S. export and sanctions law as the telecommunication giant is accused of shipping electronic equipment to Iran and other countries that are forbidden.

Today's Potential Rate Volatility: High

Mortgage rates are continuing to move lower. This is being helped by the news that the US asked Canada to arrest Wanzhou Meng, chief financial officer of Huawei Technologies Co. in order to extradite her to the US. Huawei is the world’s largest supplier of telecommunications network equipment and second-biggest maker of smartphones. This is giving the markets a signel that trade tensions could regress very shortly and helping to push rates lower.

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

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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