Market data is mixed following FOMC

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Published Date 12/15/2022

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 +29 bps yesterday. This was enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Retail Sales: November headline Retail Sales were dismal, down -0.6% vs. est. of -0.1%. Ex-Autos, they were down -0.2% vs. est. of +0.2%.

Jobs: Initial Weekly Jobless Claims were much lighter (better) than expected, 211K vs. est. of 230K. The more closely watched 4 week moving average dropped to 227K. Continuing Claims matched expectations at 1.671M.

Manufacturing: The December NY Empire Manufacturing Index showed a huge reversal from some small gains in November (+4.5) to a big contraction in Dec of -11.2, the market was expecting -1.0. The Philly Fed Manufacturing Survey also showed a major contraction, down -13.8 vs. est. of -10.0. November Industrial Production also was weaker than expected, -0.2% vs. 0.1% and Capacity Utilization 79.8% vs. 79.8%

Central Bank Palooza: The Swiss National Bank raised their key interest rate by 50BPS to 1.00%. The Bank of England raised their rate by 50BPS to 3.50% (a 14 year high). The vote was 7-2 which breaks down to 6 wanting a 50BPS hike and 1 for 75BPS. 2 voted for no change. BofE officials admit that they are probably already in a recession. The European Central Bank (ECB) raised their rates by 50BPS with their main rate now at 2.50% and gave the guidance that interest rates “will still have to rise significantly at a steady pace.” They also announced that QT will begin in March at a "measured, predictable pace," with the average monthly decline in bonds will amount to 15 billion euros until the end of the second quarter.

Today's Potential Rate Volatility: Neutral

This morning markets are mostly treading water. Volatility has started at moderate to high levels with our deluge of data.

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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