Wholesale Inflation Rises at Quickest Pace Since 2012

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Published Date 10/12/2017

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 +3 bps yesterday. This probably wasn't enough to improve mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Jobless Claims were lower than expected (243K vs est of 2551K). The more closely watched 4-week moving average fell by 9.5K to 257,500.

Inflation: The Core (ex-food and energy) PPI for September was double the market expectations (0.4% vs est of 0.2%). The more closely watched YOY data showed that Core PPI hit 2.2% vs est of 2.0%. The Headline PPI jumped to 2.6% vs est of 2.5%.

Treasury Auctions Today: We have the most significant auction of the week today with our 30 year Treasury bond at 1EST.

Fed: Today we will hear from Lael Brainard and Fed Chair Front Runner Jerome Powell.

Eurozone: Industrial Production MOM was very strong at 1.4% vs est of 0.5%. YOY that hit 3.8% vs est of 2.5%.

ECB President Mario Draghi will speak at 10:30EST.

Today's Potential Rate Volatility: Low

Short of something very unexpected, mortgage rates should move sideways for the rest of the day. The only thing, while unlikely, that can move mortgage rates and cause rate volatility are unexpected comments from Mario Draghi.

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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