MARKET COMMENT
Mortgage bond prices finished the week lower which put upward pressure on rates. Rates were relatively flat Monday morning but spiked higher Monday afternoon into Tuesday morning as stimulus talks broke down. The data was mixed. The Fed “Beige Book” showed slight to modest economic recovery but noted, “Districts characterized the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty.” NAHB housing was 85 vs the expected 83. Housing starts were 1415K vs 1430K. Weekly jobless claims were 787K vs the expected 860K. This did not help rates. Existing home sales surged higher by 6.54M vs 6.1M. Leading economic indicators rose 0.7% vs 0.6%. Mortgage interest rates finished the week worse by approximately 3/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| New Home Sales | Monday, Oct. 26, 10:00 am, et |
1015K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Durable Goods Orders | Tuesday, Oct. 27, 8:30 am, et |
Up 0.8% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Oct. 27, 10:00 am, et |
102 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| FHFA House Price Index | Tuesday, Oct. 27, 10:00 am, et |
Up 1.1% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Q3 GDP | Thursday, Oct. 29, 8:30 am, et |
Up 32% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Q3 Employment Cost Index | Friday, Oct. 30, 8:30 am, et |
Up 0.5% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, Oct. 30, 8:30 am, et |
Up 0.5%, Up 1.1% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Oct. 30, 8:30 am, et |
Up 0.3% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment | Friday, Oct. 30, 10:00 am, et |
79 | Important. An indication of consumers’ willingness to spend. 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 keep rates generally low through continued MBS purchases this does not mean they will necessarily improve from these levels. Caution is key.
