July Personal Consumption Expenditures in line with expectations

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Published Date 8/31/2023

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 +3 bps yesterday. This was not enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: The August Challenger Job Cuts showed that announced corporate cuts increased to 75k which is triple the pace of 24K in July. Initial Weekly Jobless Claims were lighter than expected, 228K versus estimates of 235K. The more closely watched 4 week moving average remained at 237K. Continuing Claims were 1.725M versus estimates of 1.700M.

Inflation: The Headline July Personal Consumption Expenditures (PCE), increased by 0.2% on a MOM basis which matched expectations and 3.3% on a YOY basis which also matched expectations but was higher than June's YOY pace of 3.0%. Core PCE (ex food and energy) had the same story with the MOM reading matching estimates of 0.2%. YOY, it was up 4.2%.

Income and Spending: Personal Incomes were lighter than expected, 0.2% versus estimates of 0.3% but Personal Spending shot up by 0.8% versus estimates of 0.6%. Plus Spending in the prior month was revised higher from 0.5% to 0.6% which is causing a major dip in the personal savings level.

Manufacturing: The August Chicago Manufacturing PMI was better than expected, 48.7 versus estimates of 44.1 but it is still below 50.0 which mean it is still contractionary.

The Fed: Today we hear from Bostic and Collins.

Today's Potential Rate Volatility: High

This morning markets are mostly treading water. Volatility has started high with a narrow trading channel.

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.

All loans are subject to credit approval. Interest rates are subject to change daily and without notice. Current interest rates shown our indicative of market conditions and individual qualifications and will vary upon your lock-in period, occupancy, loan type, credit score, purpose and loan to value and lending source.