Rate markets eying Davos, Coronavirus, and Brexit

___

Published Date 1/23/2020

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 sideways to slightly lower so far today. The MBS market worsened by +1 bps yesterday. This caused rates or fees to mostly move sideways for the day. The rates experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Jobless Claims were lighter than expected (211K vs. est. of 215K). The more closely watched 4-week moving average fell to 213,250.

Central Bank: The European Central Bank kept its key interest rate at 0.0% and the deposit rate at -0.5%. They also announced that for the first time since 2003, they'll begin a complete review of their economic policies and will announce a time table for that this afternoon.

The Coronavirus in China has now led to quarantining 20 million people in China that is impacting stocks and adding to treasury borrowing. The virus is getting a lot of attention in the US and global markets. The virus has spread to Saudi Arabia and Shanghai and is limiting global movements. Markets remembering the SARS virus 17 years ago. Maybe in another time the fear might be somewhat less, but global markets are increasingly expecting to begin some correction.

Today's Potential Rate Volatility: Average

Rates are ticking slightly lower so far today, but are still in a very tight channel. The Coronavirus is putting a bit of fear in the markets, as denoted above. Impeachment, Davos, and Brexit continue to play a role with rate 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

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.