Rates turn focus to NAFTA

___

Published Date 5/14/2018

This Week'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 trending sideways to slightly higher this morning. Last week the MBS market worsened by -22bps. This moved mortgage rates slightly higher last week. Mortgage rates have been moving mostly sideways the last week

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest potential to impact mortgage rates this week. 1) Across the Pond, 2) Fed and 3) Geopolitical

1) Across the Pond: We get some economic releases that have some real "heft" to them from world's top economies this week. Generally, the stronger these reports are, the worse it is for mortgage rates and vice versa. China - Retail Sales, Industrial Production. Japan - GDP, Industrial Production, CPI. Germany - GDP, CPI, PPI. Eurozone - GDP, CPI, and a Non-Monetary ECB Meeting. We actually will hear from quite a few voting members of the ECB this week. We started off with ECB member and Bank of France governor, Francois Villeroy de Galhau. He insisted that despite sluggish inflation, the governing council is set to stick with the plan and end QE over the near term, citing September or December as the likely cutoff point and warning that the first rate hike could come quarters, not years after the end of asset purchases.

2) Fed: We will get a lot of speeches from both voting and non-voting members of the FOMC. The aggregate tone of their speeches can shape markets.

05/14 Loretta Mester, James Bullard
05/15 Robert Kaplan. John Williams
05/16 Raphael Bostic, Atlanta Fed Business Inflation Expectations, Jame Bullard
05/17 Philly Fed Business Outlook Survey, Neel Kashkari
05/18 Lael Brainard, Robert Kaplan

3) Geopolitical: NAFTA will get the bulk of attention from bond traders as the May 17th deadline imposed by Speaker Paul Ryan is fast approaching. Italy will continue to be a concern for the Eurozone/ECB. Trade with China continues to be closely watched as President Trump said he is working with the Chinese President, Xi to start to ease up on exports to ZTE. Also, China's Vice Premier Lie He is traveling to Washington to continue talks with Treasury Secretary Steven Mnuchin.

This Week's Potential Volatility: Average

Mortgage rates could see some volatility from overseas economic data this week. If those numbers are inline with expectations, look for rates to once again move sideways with relatively 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

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

http://nmlsconsumeraccess.org/

NMLS # 75605