A strong second-estimate for third quarter GDP is pushing investors out of bonds and into stocks, bring up Treasury yields and mortgage rates. While rates are a little higher today, they’re still on the lower end of the spectrum for 2017. Read on for more details.
Market Outlook 11.27.17 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Strong GDP pushes rates higher
If we take a look at the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going), we can see that it’s up a little over five basis points right now.
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That’s in large part due to the fact that the second-estimate for third quarter GDP came in at a very solid 3.3% this morning, bolstering investor optimism about the economy.
With Fed chair nominee Jerome Powell having a smooth confirmation hearing yesterday, and now a solid GDP number today, it certainly seems as though we are positioned for gradual monetary tightening from the Fed.
Their FOMC meeting is only two weeks away and it’s widely anticipated that they will raise the nation’s benchmark interest rate, the federal funds rate, by a quarter-point.
We won’t see a spike in mortgage rates when that happens, as the markets have already priced in that adjustment; however, there is the potential for the Fed to put forth a message that stirs investors into believing that more rate hikes will indeed happen in 2018.
There’s been plenty of chatter of the past few weeks about what 2018 has in store, and right now there is a slight disconnect with the markets and the Fed. Investors right now just aren’t willing to bet on the fact that the Fed will hike as much as they say they will.
Strong economic data, such as the GDP reading this morning, are really what they need to see to change their minds–but a firm message from the Fed can also impact where they stand.
The bottom line here is that when the economy performs well and the Fed pushes benchmark interest rates higher, mortgage rates rise as well. We’re not expecting any jarring surges higher, but gradual increases over the coming weeks and months are likely.
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There’s always the possibility that mortgage rates will move lower at times, but for now, it seems that the long-term trend is for them to edge higher.
The good news is that rates are still on the lower end of the spectrum for 2017, which is why we’re recommending that anyone thinking about purchasing a home or refinancing their current mortgage locks in a rate sooner rather than later.
Click here to head to our Mortgage Builder and figure out how much you could save.
Today’s economic data:
GDP
The second-estimate for third quarter GDP came in at 3.3% this morning, which is exactly what analysts had expected. That’s a rise of three tenths from the previous reading.
Fedspeak
- Fed Chair Janet Yellen at 8:00am
- New York Fed President William Dudley at 8:30am
- San Francisco Fed President John Williams at 1:50pm
Pending Home Sales Index
- 10:00am
EIA Petroleum Status Report
- 10:30am
Beige Book
- 2:00pm
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Notable events this week:
Monday:
- New Home Sales
- Dallas Fed Mfg Survey
- Fedspeak
Tuesday:
- International Trade in Goods
- FHFA House Price Index
- S&P Corelogic Case-Shiller HPI
- Fedspeak
- Consumer Confidence
- Richmond Fed Mfg Index
Wednesday:
- GDP
- Fedspeak
- Pending Home Sales Index
- EIA Petroleum Status Report
- Beige Book
Thursday:
- Jobless Claims
- Personal Income and Outlays
- Chicago PMI
- Fedspeak
Friday:
- Fedspeak
- PMI Manufacturing Index
- ISM Mfg Index
- Construction Spending
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from Total Mortgage Blog http://ift.tt/2Amff0y
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