Mortgage rates improved by ~.125% during the week of August 17th-21st and those improvements vanished last week as ongoing volatility rattled the markets. I will not be surprised to see volatility continue this week because the week before Labor Day traditionally sees fewer traders in the office (and therefore fewer buyers and sellers).
Over the weekend Fed vice-chair Stanley Fischer commented that, “I will not, and indeed cannot, tell you what decision the Fed will reach by Sept. 17th.” Up until these comments the financial markets were leaning towards inaction on the part of the Fed when they meet in a couple weeks. As financial market volatility and weakness in the Chinese economy persist one would think the Fed may place rate hikes on hold. However, Fischer’s comments show the Fed is still seriously considering a rate hike. The financial markets currently think there is a 28% chance the Fed will do so.
The economic calendar is jam packed with significant economic data this week. Among the highlights are Unit Labor Costs (Wed.), the Fed’s Beige Book (Wed.), ADP jobs report (Wed.), Initial jobless claims (Thurs.), and the all-important jobs report (Fri.). The markets are expecting ~220,000 new jobs created in August.
From a technical perspective the 200-day moving average looks as if it will keep rates from getting substantially better but there is room for modest improvement. I think loan applicants have more to lose than to gain but there does not appear to be an imminent need to lock so I will maintain a neutral position for now.
Current Outlook: neutral