We’ve got a very busy week ahead in the markets with a Fed meeting and a monthly jobs report on tap. So far, though, mortgage rates are holding steady.
It does seem as though they are poised to continue moving higher in the near-term so borrowers will likely get the better deal by taking action soon. Read on for more details.
Where are mortgage rates going?
Rates continue to hold at high levels on the year
April has just about come and gone and mortgage rates are still holding at high levels on the year.
It was a whirlwind of a month, especially the latter half, as we dealt with a turbulent bond market.
Early last week, the yield on the 10-year Treasury note, which is the best market indicator of where mortgage rates are going, jumped up over 3.0% to its highest position since late 2013.
Mortgage rates typically move in the same direction as the 10-year yield so it was no surprise that mortgage rates had a notable spike last week with the average rate on the 30-year fixed rate mortgage moving eleven basis points higher up to 4.58%, according to the Freddie Mac Primary Mortgage Market Survey.
The 10-year yield, however, wasn’t able to persist over 3.0% for very long and currently sits down a couple basis points on the day at 2.95%. We did get the Federal Reserve’s favorite inflation reading out today, revealing that inflation is just below the Fed’s target of 2.0% at 1.9%.
All eyes will turn to the Eccles Building on Wednesday afternoon.
That segues us nicely into the first notable event of the week: the Federal Open Market Committee meeting on Tuesday and Wednesday.
This week’s meeting is less about the official decision on interest rates (it’s a virtual lock that they will keep the federal funds rate unchanged at 1.50%-1.75%) and more about any wording changes to their written statement.
Financial market participants will no doubt get out their finest toothed combs as they go through the written announcement on Wednesday afternoon with the hope of finding at least one clue about the future of monetary policy.
After that meeting is over investors will turn their eye toward the Employment Situation (a.k.a. the monthly jobs report) for April, which will get released early Friday morning. Analysts are calling for 190,000 jobs added in April.
That’s in the standard, strong enough to keep investors happy, range. That would also be a big step up from the extremely disappointing 103,000 that was posted in the March report.
Investors will also be looking closely at average hourly earnings. The consensus is for a 0.2% rise. Anything at or above that level would satisfy investors and put some upward pressure on mortgage rates.
There is clearly a lot happening this week. That means that there are plenty of chances for mortgage rates to bounce around and adjust as the news comes in.
Right now, it still seems as though mortgage rates are much more likely to move higher than they are to retreat back down.
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Rate/Float Recommendation
Lock now before rates jump again
With mortgage rates at high levels on the year and poised for more upward movement, it definitely makes sense for most borrowers looking to buy a home or refinance their current mortgage to lock in a rate sooner rather than later.
The longer you wait, the more likely it is that rates will be higher when you finally decide to take action.
Learn what you can do to get the best interest rate possible.
Today’s economic data:
Personal Income and Outlays
Personal income ticked up 0.3% from the prior month in March. Consumer spending ticked up 0.4%.
The PCE Price Index was unchanged month over month, putting the year over year change at 2.0%.
Core PCE also ticked up 0.2% month over month, putting it at 1.9% year over year.
Chicago PMI
Chicago PMI hit 57.6 for April. That’s just about in line with the 57.8 that analysts had expected.
Pending Home Sales Index
The pending home sales index increased by 0.4% month over month putting it at 107.6.
Dallas Fed Mfg Survey
The production index jumped up from a 12.7 in the prior reading to a 25.3 for April. The general activity index stayed in a tighter range, moving from 21.4 to 21.8.
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Notable events this week:
Monday:
- Personal Income and Outlays
- Chicago PMI
- Pending Home Sales Index
- Dallas Fed Mfg Survey
Tuesday:
- FOMC Meeting Begins
- PMI Manufacturing Index
- ISM Mfg Index
- Construction Spending
Wednesday:
- ADP Employment Report
- EIA Petroleum Status Report
- FOMC Meeting Ends
Thursday:
- International Trade
- Jobless Claims
- Productivity and Costs
- PMI Services Index
- Factory Orders
- ISM Non-Mfg Index
Friday:
- Employment Situation
- Fedspeak
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