Rates remain flat as US-China trade war is put on hold

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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 moving sideways so far today.  The MBS market worsened by -40 bps last week. This was enough to worsen mortgage rates or fees.   The rates experienced moderate volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three things that have the greatest ability to impact mortgage rates this week. 1) Geopolitical, 2) Fed and 3) Oil

1) Geopolitical: U.S. Treasury Secretary Steven Mnuchin declared that looming U.S. - China trade war is "on hold." The U.S. will hold off on implementing tariffs, and China has agreed to purchase more from the U.S., specifically from the agriculture segment. Also, NAFTA is still a major concern as the administration is now focusing on a "skinny" version of NAFTA. Italy's debt problems and the Brexit will also garner plenty of attention from traders.

2) Fed: The two biggest events of the week are the release of the Minutes of the last FOMC meeting and Friday's speech by Fed Chair Powell. The Minutes will be combed over for more details about their discussions about the injection of their new word "symmetry" as it relations to their target inflation rate. We have a pretty full schedule this week:

  • 05/21 Raphael Bostic, Patrick Harker, Neel Kashkari
  • 05/22 Richmond Fed Mfg Index
  • 05/23 FOMC Minutes
  • 05/24 William Dudley, Kansas City Fed Index, Patrick Harker
  • 05/25 Jerome Powell, Robert Kaplan and Charles Evans.

3) Oil: WTI Oil prices have risen from $50.73 on May 21, 2017, to $71.39 on May 21, 2018. And the recent push above $70 has undoubtedly increased both awareness and concern over inflationary input costs. As WTI Oil marches towards $75 and Brent towards $80, it will pressure MBS.

This Week's Potential Volatility: Average

Mortgage rates and markets in general are likely to have a relatively calm week with the holiday. By Thursday of this week, many traders will be heading out of town. Of course, any unexpected geopolitical news has the ability to move rates.

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

Peter Sweeney

Loan Officer

License: NMLS 87705

Lake City Mortgage

1875 N Lakewood Dr #102, Coeur dAlene ID

Office: 208-640-5626

Cell: 208-640-5626

Email: peter.lakecitymortgage@gmail.com

Web: http://www.YourMtgXpert.com

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Peter Sweeney

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Loan Officer

License: NMLS 87705

Cell: 208-640-5626


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