Rate Update November 1, 2010
Mortgage rates are slightly better this morning.
It’s an incredibly busy week in terms of “rate-influential” news and data.
The week has already kicked off with better than expected numbers for personal income, personal spending, construction spending, and manufacturing data. Thankfully the Personal Consumption Expenditure price index also showed weak price pressure in the economy or else we may have seen rates move higher on this news.
Although there is no economic data scheduled for tomorrow the markets will be watching the elections. Republicans are expected to take back control of the House and Demo’s are expected to hold a small majority in the Senate.
The major economic news of the week will come on Wednesday when the Fed delivers its monetary policy statement. The markets have already baked QE2 into interest rates. The factors that will drive the markets are how much? & how quickly? I expect interest rates to improve leading up to the announcement which is why I’ve been in a “floating” position since last Wednesday.
However, in order for the Fed to engage in QE2 they will need to print money which will begin to raise concerns about long-term inflation; a topic I wrote about last November which you can see HERE. Inflation is the number one driver of mortgage rates so I think we may see long-term rates bottom out on Wednesday or Thursday.
Oh yea, and we also get the monthly jobs report on Friday. It should prove to be an interesting week!
Current outlook: floating until Wednesday-Thursday