Here we go with another week. We’re looking at a moderate economic calendar that has the potential to offer some movement for current mortgage rates.
Tuesday and Wednesday are the busiest on the surface, so stay tuned for what happens on those days.
In general, it looks like rates could return to a slow rise this week. Read on for more details.
Where are mortgage rates going?
Rates continue to move sideways as we head into the weekend
It’s a fairly slow start to the week with no significant economic reports scheduled for release today. We did, however, hear from Cleveland Fed President Loretta Mester, who was off giving a speech in Paris.
The historically hawkish Fed President struck a more tone today as she said the Fed should continue its gradual approach towards adjusting the federal funds rate. Here it is in her own words:
“In my view, the medium-run outlook supports the continued gradual removal of policy accommodation; it seems the best strategy for balancing the risks to both of our policy goals and avoiding a build-up of financial stability risks… We want to give inflation time to move back to goal… this argues against a steep path.”
Last week’s string of soft inflation data certainly didn’t play into the Fed hawks’ hands, making it more likely that there will only be two more quarter point increases in 2018.
One of those is widely expected to take place a month from now on June 14, at the upcoming Federal Open Market Committee Meeting.
According to the CME Group’s Fed Funds futures, there is a 95% chance that the federal funds rate will get bumped up to a target range of 1.75%-2.00%.
Mortgage rates aren’t directly tied to the federal funds rate but we do see rates adjust depending on the word out from the Fed.
We’ll hear from a handful of Fed officials this week and the more likely it looks like there will be an aggressive approach toward rate increases, the more upward pressure there will be on mortgage rates.
The yield on the 10-year Treasury note is the best market indicator of where mortgage rates are going. Right now, that yield is at 2.99%, which is two basis points above where it started the day.
That’s some slight upward momentum but not enough to really signal a notable rise for mortgage rates.
Looking ahead to the rest of the week, there are a few important economic reports scheduled for release that financial market participants will definitely have their eyes on.
The two that immediately pop out are Retail Sales and Industrial Production, on Tuesday and Wednesday, respectively.
If those reports show a healthy U.S. economy, mortgage rates could move higher.
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Rate/Float Recommendation
Locking now is likely the smart move
The expectation for the coming weeks and months is for mortgage rates to steadily increase as the Fed follows through with its plan for multiple rate hikes.
Given this expectation, we believe it makes sense for anyone looking to buy a home or refinance their current mortgage to lock in a rate now in order to avoid the risk of a higher rate.
It only takes a quick phone call or a couple minutes online to get a free rate quote.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Fedspeak
- Cleveland Fed President Loretta Mester at 2:45am
- St. Louis Fed President James Bullard at 9:40am
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Notable events this week:
Monday:
- Fedspeak
Tuesday:
- Retail Sales
- Empire State Mfg Survey
- Business Inventories
- Housing Market Index
Wednesday:
- Housing Starts
- Fedspeak
- Industrial Production
- Atlanta Fed Business Inflation Expectations
- EIA Petroleum Status Report
Thursday:
- Jobless Claims
- Philadelphia Fed Business Outlook Survey
- Bloomberg Consumer Comfort Index
- Fedspeak
Friday:
- Fedspeak
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