Initial Weekly Jobless Claims higher than expected ahead of Big Jobs Friday

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Published Date 8/4/2022

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 +15 bps yesterday. This was not enough to decrease mortgage rates or fees. The market experienced moderate volatility yesterday.

Today's Rate Forecast: Neutral

Jobs: Initial Weekly Jobless Claims were very close to the mark, hitting 260K vs. est. of 259K. However, the more closely watched 4 week moving average broke above 250K (254,750). Continuing Claims increased more than expected, 1.416M vs. est. of 1.370M. The July Challenger Job Cuts decreased from 32.5K down to 25.8K.

Trade Deficit: The Goods Trade Balance grew to $-99.5B but when you add in our Trade Surplus with Services, the overall Trade Balance dropped to $-79.6B from $-84.9B

Central Banks: The Bank of England raised their key interest rate by 50BPS to 1.75% with a 9-0 vote (although one voter wanted only a 25BPS hike. Its the first 50BPS hike since 1995. Of importance is that BofE admits what our Federal Reserve will not... that a UK recession will begin in the fourth quarter, and last all the way through next year. That’s the longest slump since the financial crisis. Officials expect the economy to shrink by around -2.1% in total.

Geopolitical: The fallout from the Taiwan visit has been amped up as China has fired several ballistic missiles over Taiwan and has had hundreds of fighter jets breach their airspace and has commenced with 5 straight days of military drills that include every scrap of air space and ocean around Taiwan.

Today's Potential Rate Volatility: Neutral

This morning markets are mostly moving sideways. Volatility has started at moderate levels with markets likely waiting on Fridays jobs report.

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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