MARKET COMMENT
Mortgage bond prices were flat for the week which kept rates in check. The data the first portion of the week was scarce, and the Treasury auctions gained additional focus. The auctions generally showed solid foreign demand, but MBS trading was choppy throughout the week. Most of the data showed weaker than expected results. Existing home sales were 5.38M versus the expected 5.52M. Weekly jobless claims were 212K, expected 219K. Durable goods fell 1.1%, expected down 0.5%. New home sales were a weaker than expected 701K. Analysts looked for a reading of 720K. Consumer sentiment data was 95.5 and near expectations. Brexit drama dominated global headlines as a deal was passed but the desired deadline was not. The UK Prime Minister then pushed for an election and received opposition on that. Mortgage interest rates finished the week with discount points near unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Confidence | Tuesday, Oct. 29, 10:00 am, et | 125 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| ADP Employment | Wednesday, Oct. 30, 8:30 am, et | 145K | Important. An indication of employment. Weakness may bring lower rates. |
| Fed Meeting Adjourns | Wednesday, Oct. 30, 2:15 pm, et | 25 basis point cut | Important. Most expect the Fed to cut rates. Volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, Oct. 31, 8:30 am, et | 215K | Important. An indication of employment. Higher claims may result in lower rates. |
| Q3 Employment Cost Index | Thursday, Oct. 31, 8:30 am, et | Up 0.6% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| Personal Income and Outlays | Thursday, Oct. 31, 8:30 am, et | Up 0.3%, Up 0.2% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Thursday, Oct. 31, 8:30 am, et | Up 0.1% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Employment | Friday, Nov. 1, 8:30 am, et | 3.5%, Payrolls +140K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| ISM Index | Friday, Nov. 1, 10:00 am, et | 48 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
A Sure Thing
Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. While analysts constantly try to predict the future, the bottom line is they continually fall short in terms of accuracy. The Fed is a prime example of this. They constantly adjust inflation expectations and rate hikes and cuts accordingly.
The great news is that mortgage interest rates remain historically very favorable despite some recent volatility. The rates today are a sure thing. Floating is risky. While the Fed is expected to cut rates this week, which could put downward pressure on mortgage rates over time, the short-term reaction isn’t always clear. Caution is key. Be cautious heading into the data.
