Conflicting economic news and geopolitical concerns pushing rates sideways

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Published Date 7/18/2019

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 on a bit of volatility. The MBS market improved by+14bps yesterday. This caused rates or fees to tick very slightly lower.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Jobless Claims matched expectations (216K). The more closely watched 4-week moving average dropped to 218,750.

Manufacturing: We got another regional report that was significantly stronger than expected. The Philly Fed came in at 21.8 vs. est of 5.0.

Leading Economic Indicators: The June release showed a rare contraction of -0.3% vs. expectations for a small gain of +0.1%.

The Fed: We will hear from Raphael Bostic and John Williams today and get their weekly release of the Balance Sheet in the afternoon.

Great Britain: Retail Sales 1.0% vs. est of -0.3%

Canada: ADP Private Payrolls change 30.4K vs. last of -16.0K

Australia: Unemployment rate of 5.2% vs. est of 5.2%

Today's Potential Rate Volatility: Average

While rates are moving sideways so far today, there has been a bit of volatility so far today. The manufacturing report this morning was stronger than expected, but on the flip side, the concern over trade and the debt ceiling is helping to keep rates in check. Look for rates to mostly move sideways today on moderate 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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