US Inflation remains tame

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Published Date 9/29/2017

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. The MBS market improved by +1 bps yesterday. This wasn't enough to improve mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Personal Outlays: August Personal Income (0.2%) and Personal Spending (0.1%) both matched market expectations. The Headline PCE YOY remained unchanged from July's pace of 1.4%. The Core PCE YOY number dropped from 1.4% to 1.3%. Fairly tame data in the Fed's key measure of inflation but inline with market expectations.

Manufacturing: The bell-weather Chicago PMI was very robust, coming in at three-year high of 65.2 vs est of 58.5. Any reading above 50.0 is expansionary, and readings above 60.0 are very rare.

Consumer Confidence: The final reading for the University of Michigan's Index was revised from 95.3 to 95.1. That is also (95.1) the final reading for August, this is moving sideways.

Fed: Today we hear from Patrick Harker.

Germany (number 4 economy): Retail Sales were much worse than expected (-0.4% vs est of +0.5%) but their Unemployment Rate was better than expected (5.6% vs est of 5.7%).

Great Britain (number 5 economy): They revised their 2nd QTR YOY GDP down from 1.7% to 1.5%, but the QoQ gain remained at 0.3%. Meanwhile, Business Investment jumped by 2.5% in the 2nd QTR.

Spain (number 14 economy): A big vote this weekend (maybe) on Catalonia independence.

Today's Potential Rate Volatility: Average

Inflation is still very tame, but we had strong manufacturing numbers. Because of that, mortgage rates will continue to trade in a tight range with modest volatility going into the weekend.

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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