Manufacturing and jobs data surprise the markets

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Published Date 5/18/2017

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 backed securities (FNMA 3.50 MBS) gained +52 basis points (BPS) from Tuesday's close which caused fixed mortgage rates to move lower for the session.

Today's Rate Forecast: Neutral

Jobs: The weekly claims data continues to show almost no labor slack and full employment. Initial Weekly Jobless claims were lower than expected (232K vs est. of 240K) and the more closely watched 4-week moving average fell to 240,750 which is crazy-low. Continuing Claims came in at 1.898M which is a 44-year low!

U.S. Political: Former FBI Director Robert Mueller has been appointed as the Special Counsel to investigate Trump/Russia.

Treasury: Treasury Secretary Steven Mnuchin will speak today and push forward his tax agenda.

Fed: Cleveland Fed President Loretta Mester (non-voting member) will speak at 1:15 EST.

Philly Fed: Their Manufacturing and Business Outlook Survey crushed market expectations with a very robust 38.8 vs est. of 19.5. The May reading is the third highest reading since 2011!

Great Britain: Retail Sales were double the market expectations (2.3% vs est. of 1.0%).

ECB: Central Bank President Mario Draghi will speak at 1:00 EST.

Today's Potential Rate Volatility: High

Mortgage rates have fallen to the lower part of the channel we’ve seen develop since the end of last year. When this happens, increased volatility is likely. While there isn't any scheduled news left for the day, political news can quickly swing the markets and mortgage rates as we experienced yesterday.

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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