Rates At a Glance

Mortgage Rates
Currently Trending
Today’s Mortgage
Rate Forecast
Today’s Potential
Rate Volatility
Neutral Neutral High
(by Sigma Research)

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.  Tracking these securities real-time is critical.  For more information about the rate market, contact me directly.  I’m among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are basicly unchanged so far today.  The MBS market improved by +5 bps yesterday. This was not enough to improve mortgage rates or fees.    The market experienced moderate to low volatility yesterday.

Today’s Rate Forecast: Neutral

GDP: The 2nd QTR GDP had its first round of revisions and it matched market expectations of 1.1%. The Price Index did move higher though , from 2.2% to 2.3%. Headline PCE QoQ moved upward from 1.9% to 2.0% and the Core PCE moved up from 1.7% to 1.8%. So, this report showed small increases in the inflationary data but this is very old data at this point and Fed is now looking at 3rd and 4th QTR projections for their next move. Fed: Fed Reserve Chair Janet Yellen said that the FOMC” continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives,” and she added “Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”  The other fed officials that spoke echoed Janet Yellen’s thoughts that a rate increase, based on recent economic performance, was in the cards.  However, Janet Yellen did make mention that the fed will continue the purchase of MBS.  This is helping to keep mortgage rates in check this morning and potentially throughout the rest of the year.

Today’s Potential Rate Volatility: High

As we’ve been saying all week, this would be a big day for mortgage rates with high volatility. That’s certainly played out this morning. We expect that the market will continue to digest Janet Yellen’s and the other fed officials comments throughout the day increasing the likelihood of high volatility.

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.


Daily Market Analysis


Another quiet start this morning. At 8:30 the data for the session; weekly jobless claims down 1K to 261K, the 4 week average 264K from 265.25K the previous week. Claims are flat lining the last six weeks with little change from week to week sticking around the 265K weekly level. July durable goods orders, after two months of declines increased 4.4% against 3.7% expected; excluding the volatile transportation orders up 1.5% against estimates of 0.5%. Yr/yr -3.3%, ex transportation orders yr/yr -0.6%. Unfilled orders down 0.1% in July on top of June’s 0.9% decline; the lack of unfilled orders is not only a negative for production but also for employment. On the plus side, inventories broke a long run of contraction with a 0.3% rise and are still very lean with the inventory-to-shipments ratio unchanged at 1.64.

This afternoon Treasury auction $28B of 7 yr notes at 1:00 pm. Yesterday’s 5 yr auction met with strong demand.

Jackson Hole is underway; top central bankers and economists from around the world to discuss monetary policy issues behind closed doors. But this year a different wrinkle, eight central bankers, among them Fed governor Lael Brainard and New York Fed President William Dudley, will meet with and answer questions from about 120 activists from the Campaign for Popular Democracy’s Fed Up Campaign, a left-leaning group working to change the way the powerful central bank works. A growing momentum to change how the Fed functions, for three years now most of the key news has centered around the Fed. Frustrations are mounting not only with activist groups but within the finical community. The Fed’s track record forecasting the economy has been miserable for two years; each quarter forecasting the economic outlook only to continually revise the outlook lower. The Fed Up leaders looking for clarity and pushing for more diversity within the Fed, saying the Fed favors big money and doesn’t pay enough attention to the little people.

Markets not concerned about the meeting today with Fed Up; it’s all about how Janet Yellen thinks about a rate increase; when it will happen if at all. She has been quiet recently letting the regional presidents talk whether they are voters or not. Markets presently evenly divided about an increase timing, the majority not expecting a move at the Sept meeting but its 50/50 about Dec. Still though there are strong voices believing the Fed won’t (can’t) move this year and maybe next year also. A rate hike will push rates higher, the dollar stronger and may turn the equity markets down. Stocks are over-valued based on the GDP growth outlook, profits and future earnings outlooks and it won’t take much to tip the present balance.

Beside Yellen tomorrow Q2 revision of GDP expected at an anemic 1.1% from 1.2% on the advance report last month.

At 9:30 the DJIA opened -25 after dropping 65 yesterday, NASDAQ -9, S&P -4. The 10 at 1.57% +1 bp. FNMA 3.0 30 yr coupon -6 bps from yesterday’s close and -6 bps from 9:30 yesterday.

At 1:00 the Treasury auction, the only issue left for the day.

PRICES @ 10:00 AM

10 yr note: -3/32 (9 bp) 1.57% +1 bp

5 yr note: -2/32 (6 bp) 1.15% +1 bp

2 Yr note: unch 0.77% unch

30 yr bond: -6/32 (18 bp) 2.26% +1 bp

Libor Rates: 1 mo 0.519%; 3 mo 0.825%; 6 mo 1.223%; 1 yr 1.526%

30 yr FNMA 3.0 Sept: @9:30 103.64 -8 bp (-8 bp from 9:30 yesterday)

15 yr FNMA 3.0: @9:30 104.73 +3 bp (unch from 9:30 yesterday)

30 yr GNMA 3.0: @9:30 104.55 -6 bp (-6 bp from 9:30 yesterday)

Dollar/Yen: 100.54 +0.09 yen

Dollar/Euro: $1.1292 +$0.0027

Dollar Index: 94.66 -0.11

Gold: $1324.00 -$5.70

Crude Oil: $46.59 -$0.18

DJIA: 18,467.58 -13.90

NASDAQ: 5211.80 -5.90

S&P 500: 2174.16 -1.28