Category: Rate Update

Mortgage rates are lower today.

This morning’s jobs report was worse than expected anyway you want to look at it.  The monthly jobs report indicated that the US economy lost 84,000 jobs in August.  Furthermore, the unemployment rate rose to 6.1%, the highest level since September of 2003.  Lastly, wages also rose quicker than expected.  Although this is good news for the average American worker it is bad for mortgage rates because it raises concerns over “wage-based” inflation.

This morning’s weak economic news is crushing the stock market again which is good for interest rates.  Mortgage rates are modestly lower today.  We will shift to a floating position.  However, it is possible bond prices could suffer this afternoon from a “leash-effect” which is a technical trading pattern.  This would threaten the gains we’ve made in the past week.

Current Outlook: floating

Mortgage rates remain unchanged although we are optimistic that they may move lower following tomorrow’s jobs report.

Being that tomorrow is the first Friday of the month the Labor Department will be issuing their monthly jobs report.  Why is the monthly jobs report important to the direction of mortgage rates?

Here is a direct quote from my blog posting on the subject which can be viewed at this link:

The employment data gives the most comprehensive report on how many people are looking for jobs, how many have them, what they’re getting paid and how many hours they are working. These numbers are the best way to gauge the current state and future direction of the economy. They also provide insight on wage trends and wage inflation. If wage inflation threatens, usually interest rates will rise, and bond and stock prices will fall.

The analysts we follow seem to think that tomorrow’s jobs report will help mortgage rates move lower.

However, should the jobs report surprise to the upside it is likely we’d see rates move higher quickly because of technical trading patterns current present in the market.

Current Outlook: floating bias

Mortgage rates are lower today.

In yesterday’s rate update we explained that we thought mortgage rates would first increase in response to lower oil prices (because of the stock market rally) and then decrease because of the anti-inflationary implications.

However, stocks could not sustain the rally yesterday which helped mortgage-backed bonds advance (leading to lower mortgage rates).

It is a relatively light day for economic news.  For now we are going to remain in a neutral stance to see if rates can continue to move lower.  However, bond prices are approaching an important ceiling of resistance as shown below so we need to be ready to lock.

Current Outlook: neutral

Mortgage rates are slightly lower today but we don’t expect that to last.

This morning the Personal Consumption Expenditure (PCE) report was released and showed worse than expected inflation pressures (bad sign for mortgage rates).  The report indicated that prices in the PCE index rose by 4.5% from a year earlier which is the highest climb since February 1991.

When you strip out volatile food and energy prices the so called “core” index rose by 2.4%.  This is the steepest year over year increase since February 2007. 

Hot inflation news is a negative sign for mortgage rates.  This coupled with touch technical trading patterns lead us to believe that rates will be moving higher in the near-term.  Its time to lock!

Current Outlook: locking

Mortgage rates are unchanged today.

Better than expected Gross Domestic Product numbers for the 2^nd quarter is helping the stock market this morning which is pressuring bonds.  This marks the second consecutive day in which economic data has exceeded analysts’ expectations.  Typically good news for the economy is bad news for interest rates so we’ll have to watch and see what happens today.

Traders may reluctant to make any major moves today because tomorrow we get the Personal Consumption Expenditure (PCE) report which includes the Fed’s favorite gauge on inflation.  Should this report also indicate that price pressures are hotter than expected we will likely see rates move higher in the near term.  If inflation pressures have moderated we may see rates move even lower.

Current Outlook: neutral ahead of tomorrow’s PCE report

Mortgage rates are unchanged today.

Better than expected durable goods orders were reported today.  This positive news for the economy is helping stocks which could pressure rates higher today.

It is not often I talk of weather in the same sentence as mortgage rates but today I will break the norm.  The financial markets will be tracking Hurricane Gustav (you may also track it here) as it approaches the oil-producing Gulf of Mexico.  Should the hurricane cause damage to off-shore oil drillers we could see oil prices spike which would have an inflationary impact on our economy (hence, mortgage rates would likely respond be moving higher). 

The analysts we pay attention to still believe that technical trading patterns could push mortgage rates lower.  Since rates have already benefitted by moving lower in the past week we will shift our outlook to neutral.

Current Outlook: neutral

Mortgage rates are essentially unchanged today.

Worse than expected economic news out of Europe is helping the US dollar rally versus other currencies right now.  A stronger US dollar has an anti-inflationary impact because it effectively makes the foreign imports we purchase less expensive.

From a technical standpoint mortgage-backed bonds are trading in between the 50 & 100-day moving averages.  We remain in a floating position but will have to watch the bond market closely over the next few days.

Current Outlook: floating bias