Financial markets participants are still dealing with the comments made by President Trump about steel and aluminum tariffs. Trade war concerns are pushing down both stocks and bond yields, keeping mortgage rates down to kick off the week. Read on for more details.
Where are mortgage rates going?
Trade war concerns still influencing investors
President Trump made some comments late last week about implementing tariffs on steel and aluminum imports. Unsurprisingly, nation’s facing these tariffs did not appreciate hearing this news, leading investors to fear a possible trade war.
Already we’ve seen several proposals from the European Union for tariffs on U.S. products. Investors are still dealing with the jitters, as all of major market indexes in the U.S. are trading in the red.
The yield on the 10-year Treasury note (which is the best market indicator of where mortgage rates are going), is currently trading at 2.84%. That’s down slightly from its opening position. Mortgage rates typically move in the same direction as the 10-year yield, so rates are flat to lower as we begin the week.
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Monthly Jobs Report Big Report Out This Week
Looking ahead to the rest of the week, the main economic report for investors will certainly be the Employment Situation (a.k.a. the monthly jobs report) for February.
That report is always one of the biggest market movers each month, and there’s no reason the believe that this time around will be any different.
Financial market participants will of course be looking at the headline reading of jobs added; however, they will be especially interested in the average hourly earnings reading to see if there is any upward inflationary pressure.
Analysts are calling for a monthly uptick of 0.2%, so anything above that mark would be notable. At this point, these are the indicators that investors are looking at to help gauge what they think Federal Open Market Committee members will do at upcoming meetings.
We already have a quarter-point increase to the federal funds rate as a virtual lock at their next meeting in three weeks (86.0% chance of happening according to the CME Group), but after that, the future for monetary policy gets a little murky.
The dialogue has been back and forth as pundits clash about inflation and if it will increase at a pace that will necessitate a faster tightening schedule than previously anticipated.
At the start of the year, the general consensus among market participants was that there would be three rate hikes in 2018. Then we got a string of inflation reports that began to sway many investors into the position of four rate hikes in 2018.
The situation has settled somewhat the past two weeks but the groundwork has been laid for a surge in optimism if and when we do get some more strong inflation readings.
Rate/Float Recommendation
Lock now before rates move higher
We saw mortgage rates rise for the eighth consecutive week in the Freddie Mac Primary Mortgage Market Survey on Thursday. That brought the average rate on a 30-year fixed rate mortgage up to 4.43%. That’s a jump of forty-eight basis points since the start of the year.
Learn what you can do to get the best interest rate possible.
There is still a lot of talk about mortgage rates rising throughout the year, with several analysts calling for rates to his 5% by the time 2019 rolls around. Given this expectation, we think it makes sense for a lot of borrowers to lock in a rate on a purchase or refinance, sooner rather than later.
Today’s economic data:
PMI Services Index
The PMI services index hit 55.9 in February. That’s exactly what analysts had expected.
ISM Non-Mfg Index
The ISM non-mfg index hit 59.5 in February. Analysts had predicted a mark of 58.8.
Fedspeak
Fed Vice Chairman Randal Quarles at 1:15pm.
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Notable events this week:
Monday:
- PMI Services Index
- ISM Non-Mfg Index
- Fedspeak
Tuesday:
- Fedspeak
- Factory Orders
Wednesday:
- Fedspeak
- ADP Employment Report
- International Trade
- Productivity and Costs
- EIA Petroleum Status Report
- Beige Book
Thursday:
- Jobless Claims
Friday:
- Employment Situation for February
- Fedspeak
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from Total Mortgage Blog http://ift.tt/2oGEcgc
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