Three things that could impact rates this week

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Published Date 1/8/2024

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: Lower

Mortgage rates are getting support today. The MBS market worsened by -43 bps last week. This may have been enough to increase mortgage rates or fees. The market experienced high volatility last week.

This week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Inflation, 2) Treasury Auction, 3) Bank Earnings.

1) Inflation Nation: We will get both CPI and PPI this week with the markets giving more weight to CPI. The hotter this reading is, the worse it will be for rates (and vice versa).

2) Treasury Auction: We get a huge dose of debt that will hit the market place this week. The overall size of the new debt and the constant drip of increase debt is a major concern for long bond traders. The long bond market will correlate the most with the 30 year Treasury bond auction:

01/09 3 year note.

01/10 10 year note.

01/11 30 year bond.

3) Bank Earnings: With so much "wonky" labor, manufacturing and economic data the bond market will look to overall bank earnings to understand the health of businesses and consumers.

This week's Potential Rate Volatility: High

This morning markets are getting some support. Volatility has started moderate and will likely stay that way until CPI and PPI at the end of the week.

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.

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