Three things that could impact rates this week

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Published Date 6/17/2024

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 under mild pressure today. The MBS market improved by +29 bps last week. This may have been enough to decrease mortgage rates or fees. The market experienced high volatility last week.

This week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Retail Sales, 2) The Fed and 3) Central Banks.

1) Retail Sales: This is the biggest economic release of the week and will give us a better understanding of our consumer-driven economy. The last time around the headline number was flat at 0.0 and is expected to move to 0.3% this time around. Consumer Credit Changes have not reflected any pick up in consumer spending though. The higher this data series is, the worse it will be for rates. And vice versa.

2) The Fed: Now that the FOMC meeting and Economic Projections are in the rearview mirror, the media blackout period for Fed speak is over and we will hear from many this week to get their take on the Dot Plot chart, etc.

06/17 Harker, Kashkari, Williams

06/18 Barkin, Logan, Musalem, Goolsbee, Cook

06/20 Atlanta Fed Business Inflation Expectations, Barkin

3) Central Banks: We will get interest rate decisions out of Australia and England. The Bank of England will take center stage. They were widely expected to be the first G7 Central Bank to start cutting but that distinction went to the Bank of Canada. The BofE keeps pushing back their first rate cut and may push out even further at this meeting.

Treasury Auction:

We have an important 20 Year Treasury Bond Auction on Tuesday.

This week's Potential Rate Volatility: Neutral

This morning markets have seen some mild movement. Volatility has started low but will pick up to moderate levels later in the week.

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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