Three things that can impact rates this week

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Published Date 3/28/2022

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 today. The MBS market worsened by -166 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This week's Rate Forecast: Higher

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Jobs and 3) Geopolitical

1) Inflation: We get the Fed's key measure of inflation, Core (ex food and energy) PCE on Thursday. The core reading is expected to hit 5.5% on a YOY basis and the headline is expected to reach 6.7%, both are astronomically high and very negative for long bonds. We also some pricing data out of ISM this week.

2) Jobs: We get a slew of job and wage related data in JOLTS, ADP, Challenger Job Cuts, Weekly Claims, ISM, Personal Income and it all culminates in Big Jobs Friday where we get Non Farm Payrolls, Unemployment Rate, Average Hourly Wages and more.

3) Geopolitical: Global headlines from the war in Ukraine, sanctions, the attack on the petro-dollar, along with yet another major lockdown in China over Covid will impact pricing.

Treasury Sales: We have some shorter to mid term range note auctions this week:

03/28 2 year note, 5 year note

03/29 7 year note.

This week's Potential Rate Volatility: High

This morning markets are calm to start with but inflationary pressure will force the markets to continue moving higher. Volatility is moderate to start this week however with both inflationary and jobs data expect things to get bumpy.

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.