Rates remain calm as markets digest incoming economic data

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Published Date 4/30/2020

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: Neutral

Rates are moving mostly sideways so far today. The MBS market improved by +11 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 higher than expected (3.839M vs. est. of 3.500M). Continuing Claims hit 17.992M. The 1st QTR Employment Cost Index rose by 0.8% vs. est. of 0.6%.

Inflation: The Core PCE (Personal Consumption Expenditures) YOY - the Fed's key measure of inflation, dipped lower to 1.7% from the prior reading level of 1.8%. Headline PCE YOY fell to 1.3% vs. est. of 1.7%.

Income vs. Spending: Personal Incomes dropped -2.0% vs. est. of -1.5%, it was the biggest drop in MOM income since March 2013. Personal Spending fell into a bottomless pit, dropping by -7.5%.

Manufacturing: The bell-weather Chicago PMI April reading cam in at 35.4 vs. est. of 38.

Central Bank: The European Central Bank kept its key interest rate at 0.0%.

Today's Potential Rate Volatility: Low

Yesterday we were worried that the Fed meeting and press conference could cause rate volatility. That didn't happen in the least. Today, we expect rates to move sideways once again on 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

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.