Three things that could impact rates this week

Published Date 3/11/2024

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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 improved by +42 bps last week. This may have been enough to decrease mortgage rates or fees. The market experienced moderate 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) Retail Sales and 3) Treasury Auction

1) Inflation: We have many economic releases that contain inflationary data such as Import Prices and Consumer Sentiment Inflation Expectations. But it will be CPI and to a lesser extent PPI which will drive rates this week. Both headline and core CPI are expected to show continued monthly expansion, the degree of that expansion will have a major impact on rates.

2) Retail Sales: After a large contraction in the previous Retail Sales report, things are expected to pick up again in this report. The stronger this report is, the worse it will be for rates.

3) Treasury Auction: We have a record amount of longer issuance debt this week. MBS have had a very strong correlation to the results of the 30 year Treasury bond auctions. Both the 10Y note auction and the 30Y bond auctions occur after the CPI report and will have a negative reaction to a high CPI release. Here is this week's schedule:

03/11 3Y Note

03/12 10Y Note

03/13 30Y Bond

This week's Potential Rate Volatility: High

This morning markets are seeing very little change. Volatility has started low but will increase later in 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

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