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MIG Market Watch, May 9th, 2022

MIG Market Watch, May 9th, 2022


MIG Market Watch, May 9th, 2022
Market Comment

Mortgage bond prices finished the week lower which put upward pressure on rates. Trading was very volatile with large movements throughout the week. The Fed raised rates 50 basis points Wednesday and released their plans to reduce their balance sheet. The short-term reaction was good for stocks and bonds, but the positive movements were short-lived as selling pressure emerged Thursday. The data was mixed. ISM Index was 55.4 vs 57.5. Factory orders rose 2.2% vs 1.2%. ADP employment was 247K vs 400K. The trade deficit was $109.8B vs $104B. Weekly jobless claims were 200K vs 182K. Productivity fell 7.5% vs down 4%. Unemployment was 3.6% as expected. Payrolls rose 428K vs 415K. The higher payrolls figure added to wage inflation fears. Mortgage interest rates finished the week worse by approximately 3/4 of a discount point.


Looking Ahead
Economic Indicator Release Date & Time Consensus Estimate Analysis
Consumer Price Index Wednesday, May 11,
8:30 am, et
Up 0.4%,
Core up 0.2%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Weekly Jobless Claims Thursday, May 12,
8:30 am, et
205K Important. An indication of employment. Higher claims may result in lower rates.
Producer Price Index Thursday, May 12,
8:30 am, et
Up 0.5%,
Core up 0.6%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
U of Michigan Consumer Sentiment Friday, May 13,
10:00 am, et
63.8 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Fed Balance Sheet

The Federal Reserve raised rates 50 basis points last week and detailed their plans to reduce their MBS holdings. The Fed stated: “Consistent with the Principles for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in January 2022, all Committee participants agreed to the following plans for significantly reducing the Federal Reserve’s securities holdings.

The Committee intends to reduce the Federal Reserve’s securities holdings over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account (SOMA). Beginning on June 1, principal payments from securities held in the SOMA will be reinvested to the extent that they exceed monthly caps.

For Treasury securities, the cap will initially be set at $30 billion per month and after three months will increase to $60 billion per month. The decline in holdings of Treasury securities under this monthly cap will include Treasury coupon securities and, to the extent that coupon maturities are less than the monthly cap, Treasury bills.

For agency debt and agency mortgage-backed securities, the cap will initially be set at $17.5 billion per month and after three months will increase to $35 billion per month.

Over time, the Committee intends to maintain securities holdings in amounts needed to implement monetary policy efficiently and effectively in its ample reserves regime.

To ensure a smooth transition, the Committee intends to slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level it judges to be consistent with ample reserves.

Once balance sheet runoff has ceased, reserve balances will likely continue to decline for a time, reflecting growth in other Federal Reserve liabilities, until the Committee judges that reserve balances are at an ample level.

Thereafter, the Committee will manage securities holdings as needed to maintain ample reserves over time.”

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020