Inflation numbers continue to plunge lower

___

Published Date 5/12/2020

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

Mortgage rates are moving sideways so far today. The MBS market worsened by -26 bps yesterday. This caused rates or fees to move slightly higher for the day. The rates experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Inflation: One of the key measures of inflation crashed to its lowest level on record. The April headline Consumer Price Index YOY dropped to 0.3% vs. est of 0.4%. The more closely watched Core (ex-food and energy) CPI YOY dropped to 1.4%, down from 2.1% in March, and breaks a streak of 25 months at or above 2%.

Business Optimism: The NFIB Small Business Optimism Index for April came in at a dismal 90.9 vs. est. of 96.9.

Treasury: We have our 10-year note auction at 1:00 pm ET today.

The Fed: The Fed will begin buying corporate bond ETFs. Meanwhile, we'll hear from Bullard, Harker, Quarles, and Mester today.

Coronavirus: Here are this morning's headlines.

Russia overtakes the U.K. as the world's 2nd biggest outbreak.
As the U.S. opens up, Wuhan (the epicenter and source of the outbreak) sees cases again, and the China Health Commission says Wuhan cluster shows "prevention and control measures cannot be relaxed."
Global cases >4.1M, deaths >287K
U.S. cases >1.3M, deaths >81K

Today's Potential Rate Volatility: Average

Over the last few days, rate volatility is starting to elevate as rates push very slightly higher. Look for the same today as rates are seeing a bit of pressure so far today. However, we don't expect a dramatic move in the markets unless something unexpected occurs with the coronavirus.

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.