Three things that could impact rates this week

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Published Date 9/3/2024

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 getting some support today. The MBS market worsened by -9 bps last week. This was not enough to increase 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) Jobs, 2) ISMs and 3) The Fed.

1) Jobs: Its the first week of a new month which means we get a Big Jobs Friday report from the BLS. But throughout the week we will get a ton of job and wage related data points that the bond market will be keenly focused on: Unit Labor Costs, Challenger Job Cuts, ADP Payrolls, Initial Weekly Jobless Claims, Non Farm Payrolls, Unemployment Rate, JOLTS, Average Hourly Earnings.

2) ISMs: After a round of very weak/contractionary regional manufacturing reports last week, this week's ISM Manufacturing PMI will get a lot of weight but the ISM Services which accounts for 2/3 of our economic engine will be the center of attention with attention given to Prices Paid and the Employment Index.

3) The Fed: We will get the Fed's Beige Book on Wednesday which is prepared in advance of the September FOMC meeting. Also, Fed Gov Waller will speak on Friday after the Jobs data. The Bank of Canada is expected to cut rates on Wednesday.

This week's Potential Rate Volatility: High

This morning markets have bounced back from Friday's losses. Volatility has started high at moderate levels and will increase later in the week with the deluge of data.

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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