Mortgage Rates Went Up a Little Bit on Thursday
Mortgage
rates went up a little bit today as we continued to see
the repercussions from the FOMC meeting yesterday. The most prevalently
quoted conforming 30yr rate for top-tier scenarios moved up to 4.5%
yesterday and while there is still slightly more activity there, 4.625%
was becoming more quoted than before.
Market volatility tends to create variation in pricing strategies between lenders, and while volatility was limited today, its effects are still being managed. The market are anticipatory vehicles unless there is an out of the blue event such as we had yesterday, markets always are forward looking. Janet Yellen threw the markets a curve ball yesterday when she hinted at a much earlier increase in rates than what markets were expecting. The reaction to possible rate hikes six months sooner triggered heavy selling in treasuries mortgages and the stock market. No one thought first, everyone reacted without much consideration. Today the stock indexes recovered most of the losses yesterday while the bond and mortgage markets were little changed from yesterday.
With the new sheriff in town, I feel the Janet Yellen was trying to flex her muscles without thinking. The press conference is not the time or place to get specific when talking to the press as they will put a spin on anything do get themselves heard . When talking to the press, we complain a lot about the lack of transparency until we get transparency, then we pay the price of huge volatility. Janet simply stated what was on her mind but she also continued to say everything is on the table and data dependent - nothing changed from the last year of Fed statements.
The economic data this morning was on balance better that expected – and the 10yr is still within its two month trading range, even with the huge selling yesterday. The question now is when will the 10yr break above 2.80%? Do not overlook that in the wider picture markets are still betting on higher rates, based mainly on the outlook for a stronger economic growth that will force the Fed to begin increasing interest rates if that outlook becomes reality. That said, handicapping the economy with the weather background is highly speculative. I do not have the same positive outlook for the economy as markets do at this time, and I do not think the bond market does either or we would have seen some more movement in the rates. Within the next week, traders are not yet tossing in the towel that the economy will begin to grow more rapidly. Expect more market volatility tomorrow and next week.
In summary, it is encouraging that we have stabilized, but unlike the Ukrainian drama, Fed sentiment affects rates on more than a day to day basis. We will see where the next move takes us as the rollercoaster looks like it might be on the move again. If you floated since yesterday, it may have not been the wisest move, but you were not hurt by doing such.
Market volatility tends to create variation in pricing strategies between lenders, and while volatility was limited today, its effects are still being managed. The market are anticipatory vehicles unless there is an out of the blue event such as we had yesterday, markets always are forward looking. Janet Yellen threw the markets a curve ball yesterday when she hinted at a much earlier increase in rates than what markets were expecting. The reaction to possible rate hikes six months sooner triggered heavy selling in treasuries mortgages and the stock market. No one thought first, everyone reacted without much consideration. Today the stock indexes recovered most of the losses yesterday while the bond and mortgage markets were little changed from yesterday.
With the new sheriff in town, I feel the Janet Yellen was trying to flex her muscles without thinking. The press conference is not the time or place to get specific when talking to the press as they will put a spin on anything do get themselves heard . When talking to the press, we complain a lot about the lack of transparency until we get transparency, then we pay the price of huge volatility. Janet simply stated what was on her mind but she also continued to say everything is on the table and data dependent - nothing changed from the last year of Fed statements.
The economic data this morning was on balance better that expected – and the 10yr is still within its two month trading range, even with the huge selling yesterday. The question now is when will the 10yr break above 2.80%? Do not overlook that in the wider picture markets are still betting on higher rates, based mainly on the outlook for a stronger economic growth that will force the Fed to begin increasing interest rates if that outlook becomes reality. That said, handicapping the economy with the weather background is highly speculative. I do not have the same positive outlook for the economy as markets do at this time, and I do not think the bond market does either or we would have seen some more movement in the rates. Within the next week, traders are not yet tossing in the towel that the economy will begin to grow more rapidly. Expect more market volatility tomorrow and next week.
In summary, it is encouraging that we have stabilized, but unlike the Ukrainian drama, Fed sentiment affects rates on more than a day to day basis. We will see where the next move takes us as the rollercoaster looks like it might be on the move again. If you floated since yesterday, it may have not been the wisest move, but you were not hurt by doing such.
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