Inflation soft, jobless claims jump, and trade remains in the spotlight

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Published Date 12/12/2019

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

Rates are moving sideways to slightly higher so far today. The MBS market improved by +12 bps yesterday. This caused rates or fees to mostly move sideways for the day. The rates experienced moderate volatility.

Today's Rate Forecast: Neutral

Inflation: The November Producer Price Index (PPI) was much lighter than estimates. The Core (ex-food and energy) YOY reading was 1.3% vs. est. of 1.6%. The Headline YOY CPI was also weaker, coming in at 1.1% vs. est. of 1.2%.

Jobs: Initial Weekly Jobless Claims shot up to 252K vs. est. of 213K. However, seasonality played a significant role. The more closely watched 4-week moving average moved upward to 224K.

Central Bank: The European Central Bank (ECB) kept its main interest rate at 0.0% and the deposit rate at -0.5%. ECB President Christine Lagarde did not announce any new measures and said that they would continue to buy bonds until just before they start their rate tightening cycle. The Swiss National Bank kept its key interest rate at -0.75%.

Treasury Dump: We will have our 30-year Treasury bond auction at 1:00 pm ET.

Today's Potential Rate Volatility: Average

Rates continue to move sideways on moderate volatility. This morning we did get a tweet from President Trump indicating that the trade deal is moving forward well. The news helped rates tick higher on a bit of elevated volatility. However, we've seen this kind of news before, to have it rolled back hours or days later. Markets will remain hyperfocused on trade until it comes to a resolution.

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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