Jobless claims unexpectedly drop

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Published Date 2/22/2018

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 worsened by -31 bps yesterday. This was enough to worsen mortgage rates or fees. The rates experienced high volatility yesterday.

Today's Rate Forecast: Lower

Jobs: Initial Weekly Jobless Claims dropped to 222K vs est of 230K. The more closely watched 4-week moving average fell to 226,000 which is the second lowest reading in 45 years.

Leading Economic Indicators for January hit 1.0% vs est of 0.6%.

Fed: St. Louis Fed Pres James Bullard (non-voting member and noted dove) said "The idea that we need to go 100 basis points in 2018, that seems like a lot to me," and "Everything would have to go just right. The economy would have to surprise on the upside a bunch of times during the year. I'm not sure that's a good way to think about 2018." "We've got a ways to go on this inflation story."

New Fed Governor Randal Quarles (voting member) said that inflation running a little below target shouldn't stand in the way of rate increases. "After assessing the recent data, my take is that the current shortfall in inflation from target as most likely due to transitory factors that will fade through 2018, pushing inflation back up to target," and "Suffice to say, a deviation from our target of a few tenths of 1 percentage point, especially one I expect to fade, does not cause me great concern."

Still on deck for today is William Dudley, Raphael Bostic, and Robert Kaplan.

Great Britain: GDP was lighter than expected 1.4% YOY vs est of 1.5%.

Canada: Retail Sales tanked by -0.8% vs an expected gain of +0.2%.

Today's Potential Rate Volatility: Average

We had a bit of softer than expected global economic data that is helping to push mortgage rates slightly lower after yesterday's move higher. We expect this move to hold today with relatively low volatility.

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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