Market and rate volatility skyrockets

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Published Date 2/6/2018

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: Higher

Mortgage rates are moving higher so far today. The MBS market improved by -48 bps yesterday. This was enough to improve mortgage rates or fees. The rates and markets experienced very high volatility yesterday.

Today's Rate Forecast: Higher

Trade Imbalance: The Trade Balance for December hit -$53.1B which was about $1B deeper than expected. Imports swelled by 2.5% which is the sign that our economy is growing and gobbling up cheaper foreign raw materials and goods.

Jobs: The December Job Openings and Labor Turnover Survey showed 5.811M jobs that are currently unfilled. The market was expecting 5.9M. November was revised upward from 5.879M to 5.978M. The lack of labor slack continues to be a major problem. And here is a good example as to why so many jobs are unfilled. Here is a quote from a manufacturing representative in Ohio "In Ohio alone, they have about 20,000 available jobs in manufacturing. In Dayton, Ohio, where I’m from, we have about 4,000 jobs available today in manufacturing that we can’t fill,” BECAUSE... “We can’t get people to pass a drug test.”

Kick the Can: The House is set to vote today on a measure that would "kick the can" down the road until March 23.

Treasury Auction today: 3-year Treasury note.

Fed: Today we hear from St. Louis Fed President (nonvoting member) James Bullard.

Down Under: The Reserve Bank of Australia kept their key interest rate at 1.5%.

Germany: Their Factory Orders were much stronger than expected YOY 7.2% vs est of 3.1%.

Today's Potential Rate Volatility: High

Mortgage rates moved lower yesterday on very high volatility. The selloff in the stock market forced investors to find a safe place to put their money helping to push rates lower. Rates are ticking higher today with the stock market pushing lower at the moment. Look for continued volatility while the markets find their footing.

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.