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Fed Chairman Powell's Comments!
March 2, 2018
Rates eye Fed Chairman Powell's comments
Published Date 3/1/2018
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: Neutral
Mortgage rates are moving sideways so far today. The MBS market improved by +22 bps yesterday. This may've been enough to improve mortgage rates or fees. The rates experienced moderate volatility yesterday.
Today's Rate Forecast: Neutral
Jobs: Initial Weekly Jobless Claims were lower than expected (210K vs es of 222K) and the more closely watched 4-week moving average fell to 220,500 which is the lowest level in 49 years.
Personal Income and Outlays: Personal Income increased by 0.4% in January which was a tick higher than expected. Personal Spending matched expectations with a monthly gain of 0.2%.
The Fed's key measure of inflation, PCE YOY came in at 1.7% vs est of 1.6%. Core PCE YOY matched forecasts with a 1.5% reading.
Manufacturing: February ISM Manufacturing was the best since 2004 with a 60.8 reading which handily beat out estimates calling for a reading of 58.7. ISM Prices Paid jumped to a 6 1/2 year high (74.2 vs est of 70.5).
Trade Wars: President Trump is expected to announce higher tariffs on steel and aluminum imports today which concerns traders that it will spark a trade war which may provide some headwinds to our growing economy.
Fed: Fed Chair Powell will give his testimony to the Senate Banking Committee today at 10 AM EST. This is a much easier event to watch as the Senators have much better questions than the House does. This is Powell's chance to "walk back" some of his hawkish commentary on Tuesday or "double down on it" depending on which way he goes, so will the bond market.
China: Caixin Manufacturing PMI 51.6 vs est of 51.3
Japan: Nikkei Manufacturing PMI 54.1 vs est of 54.0
Germany: Markit Manufacturing PMI 60.6 vs est of 60.3
Eurozone: Unemployment Rate 8.6% vs est of 8.6%
Today's Potential Rate Volatility: High
Rates will be paying very close attention to Powell's connects today. We had very strong trade numbers here and abroad which would normally push rates higher, but markets are waiting to here from Powell.
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.