Initial Weekly Jobless Claims beat expectations

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Published Date 12/14/2023

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 currently leaning positive. The MBS market improved by +39 bps yesterday. This may have been enough to decrease mortgage rates or fees. The market experienced high volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Jobless Claims were lower than expected, 202K versus estimates of 220K. The more closely watched 4 week moving average fell to 213K. Continuing Claims were 1.876M versus estimates of 1.887M but increased from last week's 1.856M.

Retail Sales: November Retail Sales shocked to upside with beats across the board. The headline number was up 0.3% versus estimates of -0.1%. Ex Autos, it was up 0.2% versus estimates of -0.1% and the Control Group (which feeds into GDP) increased by 0.4% versus October's pace of 0.0%.

Import/Export: Import Prices fell again. MOM down -0.4% versus estimates of -0.8% and YOY it was down -1.4%. Export Prices were down-0.9% versus estimates of -1.0%.

Central Banks: We heard from three Central Banks today and they all kept their interest rates the same but we did have some reaction to their policy statements. The Swiss National Bank kept their interest rate at 1.75%. The Bank of England kept theirs at 5.25% with a split 6-3 vote with three voting for a 25BPS Hike. The BofE Governor Bailey was notably less dovish than Powell saying that there is still some way to go before they hit their inflation target and that they need to keep rates higher for an extended period of time. The European Central Bank (ECB) also was less dovish than the Federal Reserve but the markets sill expect them to be the first to start cutting rates in the future.

Today's Potential Rate Volatility: High

This morning markets are moving sideways. Volatility has started high with choppy movements within a narrow trade 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

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