Rates tick lower as the market digests economic data

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Published Date 4/28/2020

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

Rates are moving slightly lower so far today. The MBS market worsened by -7 bps yesterday. This caused rates or fees to mostly move sideways for the day. The rates experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Wholesale Inventories: The Preliminary March reading dropped by -1.0% vs. est. of -0.1%.

Manufacturing: The April Richmond Fed manufacturing index dropped to -53 reading, the market was expecting -6.

Trade Balance: The March Goods Trade Balance was $-64.22B vs. est. of $-62.67B.

The Fed: The Fed starts two days of FOMC meetings, which will culminate with Wednesday's FOMC policy statement.

Treasury Dump: We have our 7-year note auction at 1:00 am ET, generally not a factor in pricing.

Housing: February YOY 20 city metro Case Shiller Home Price Index rose by 3.5% vs. est. of 3.3%.

Consumer Confidence: The April reading slumped to 86.9 which was close to market expectations of 90, but a pullback from March's level of 120.

Central Bank: The Swedish Central Bank keeps its key rate unchanged but says they are ready to cut if necessary.

Coronavirus: Here are the headlines that are getting the attention of bond traders this morning.

Global cases reach more than 3 million and deaths 212K.
U.S. cases just under 1M (989K), deaths 57K.
Argentina bans all private and commercial flights until September 1.
Germany's infection rate moves higher after they eased their lockdown measures.
New Zealand officially reopens.

Today's Potential Rate Volatility: Average

The economic data today was, as expected, very soft. As a result, we see rates move slightly lower so far today. We're not looking for rates to make a significant move today ahead of the Fed policy statement due out tomorrow.

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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