Mortgage rates are unchanged today.
Like is so often the case with central bank meetings anticipation for the event proved to be more dramatic than the outcome.
Earlier today European Central Bank (ECB) President Mario Draghi reiterated his statement from last week that the ECB is prepared to do “whatever it takes” to protect the euro currency but nothing specifically was proposed. Had the ECB set forth a plan to engage in bond purchases it probably would have pressured US mortgage rates higher by easing the “flight-to-safety” trade which has helped US interest rates achieve all-time low levels.
Similarly the US Federal Reserve released its latest monetary policy statement yesterday.
In it the Fed said they would “closely monitor” the economy and “provide additional accommodation as needed…”. Most analysts are interpreting these comments to mean another round of quantitative easing will be announced at the next monetary policy meeting 6 weeks from today. The Fed will also deliver a highly anticipated statement in late August during their annual conference in Jackson Hole, Wyoming.
The Fed’s “sit and wait” approach will place additional emphasis on economic data released over the next 6 weeks. Tomorrow the all-important monthly jobs report will be released. The markets are expecting approximately 100,000 new jobs created. A number north of that may cause rates to rise and vice versa.
With a lack of explicit central bank intervention I expect the status quo to remain so I will shift to a floating position.
Current Outlook: floating