US Weekly Jobless Claims Rise More Than Expected

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Published Date 7/27/2017

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 +24 bps yesterday. This was enough to improve mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Jobless Claims hit 244K vs est of 240K. The more closely watched 4-week moving average remained at 240K.

Durable Goods: The Headline reading which contains the very volatile transportation and defense sectors jumped 6.5% vs. est of 3.00%. This was a big beat considering that the prior month (May) was revised upward significantly from -1.1% to -0.1%. Ex Transportation Durable Goods Missed with a 0.2% gain vs of 0.4%. However, the main culprit was a large upward revision to May from 0.1% to 0.6%.

International Trade in Goods: The June reading saw an increase in Exports (1.4%) and a decrease in Imports (-0.4%) however the drop in Imports is not real as it reflects a low oil price in June and does not really indicate that we imported fewer widgets into our economy.

Geopolitical: A pared down version of the Senate Health Care reform called a "skinny version" will be introduced today and voting will start this afternoon and may even continue into Friday' morning. Meanwhile, the House is having a tough time getting their 2018 Budget Resolution up for a vote amid disputes over spending levels, etc. A budget is part of the Tax Reform piece that traders have been pining for and delays on the budget mean delays on tax reform.

LIBOR Kaput: The London Interbank Offered Rate (LIBOR) will be phased out and ended by 2021 as the key interest rate indicator. This has been a key component of many residential and commercial adjustable rate mortgages for decades.

Treasury Auction: Today, we the most significant auction of the week with our 7-year note.

Today's Potential Rate Volatility: Low

Nothing left in economic news that is likely to move mortgage rates today. We're looking for mortgage rates to trade in a fairly tight channel for the rest of the day with low volatility.

Bottom Line:

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.

Source: TBWS

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