Three things that could impact rates this week

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Published Date 6/3/2024

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 support today. The MBS market improved by +2 bps last week. This was not enough to decrease mortgage rates or fees. The market experienced high volatility last week.

Today's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Central Banks, 2) Jobs and 3) ISMs.

1) Central Banks: Let the Rate Cuts Begin! We will hear from two Central Banks this week and they are both expected to cut by at least 25BPS. We will first hear from the Bank of Canada on Wednesday and then the ECB on Thursday. The key with the ECB is their forward guidance.

2) Jobs: We will get Big Jobs Friday plus a lot of job and wage related data every day this week with JOLTS, ADP, Challenger Job Cuts, Initial Weekly Jobless Claims, Unit Labor Costs, Non Farm Payrolls, Average Hourly Earnings, Unemployment Rate, U6 Underemployment Rate and Average Weekly Hours.

3) ISMs: After last week's depression era level Chicago PMI, the market will be very focused on the national ISM readings. We get ISM Manufacturing PMI today and ISM Services PMI on Wednesday.

Today's Potential Rate Volatility: High

This morning markets are getting a boost on the ISM data. Volatility will be very high this week.

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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