Markets under pressure due to Consumer Price Index

Published Date 3/12/2024

---

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: Neutral

Mortgage rates are under pressure today. The MBS market worsened by -5 bps yesterday. This was not enough to increase mortgage rates or fees. The market experienced low volatility yesterday.

Today's Rate Forecast: Neutral

Optimism: The February NFIB Small Business Optimism Index dropped from January's level of 89.9 to 89.4, estimates were for 90.6.

Inflation: February Headline Consumer Price Index (CPI) grew at a MOM pace of 0.4% versus estimates of 0.4%. YOY, it was up 3.2% versus estimates of 3.1%. Core (Ex food and energy) CPI was up 0.4% on a MOM basis versus estimates of 0.3% and 3.8% on a YOY basis versus estimates of 3.7%.

Treasury Auction: We have an important 10Y Note Auction today at 1 pm ET.

Today's Potential Rate Volatility: Neutral

This morning markets are under mild pressure due to the inflation data. Volatility started low but has risen to moderate levels.

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

---