Ryan's Rate Commentary

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 under mild pressure today. The MBS market improved by +59 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) Inflation, 2) The Fed, 3) Manufacturing.

1) Inflation: We get the Fed's official key measure of inflation, Core PCE on Friday. It is expected to rise another 0.3% on top of the previous month's increase of 0.4%. YOY, it is expected to remain at 2.8%. Bottom line is that this report is NOT expected to show inflation coming down.

2) The Fed: The bond market will be very sensitive to the post FOMC round of speakers this week.

03/25 Bostic, Goolsbee and Cook
03/27 Waller
03/29 Daly and Powell

3) Manufacturing: The manufacturing sector has been contracting for at least 15 months depending on which metric you use. This week we will get Chicago PMI and Durable Goods Orders.

Treasury Auction: Here is this week's Treasury Auction schedule:

03/25 3 year note

03/26 5 year note

03/27 7 year note

This Week's Potential Volatility: NEUTRAL
This morning markets are under mild pressure as pull back from last week. Volatility has started low but will increase 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.