Mortgage Rates A Little Lower After Yellen's Speech

Mortgage rates moved a little lower today following Yellen’s speech at Jackson Hole.  The most prevalently-quoted conforming 30yr fixed rate for top tier scenarios remains 4.125% - 4.25%, as the closing costs associated with these rates were the only change. 

All week long we waited for Janet Yellen to talk, and by the end of the day, we came away knowing nothing new other than opinions that focus on how she phrased this or that.  She still is concerned about the quality of job growth but there was a little less stress in her remarks than in previous comments on low paying jobs. The end of it; the job market is both cyclical and structural.  Meaning she believes job quality will improve as the economy grows (cyclical) -  jobs may end up being less as boomers and others step away from the work force (structural). She commented that too many Americans are still out of work while acknowledging that “considerable progress” has been made. The negative, the Fed is behind the curve and should be increasing rates sooner than what markets currently think (mid-2015) -  the positive, there is no inflation at the moment and none yet on the radar.

Mario Draghi indicated the ECB is ready to do more to try to improve the EU economies but also chided governments saying, “It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, and I believe there is scope for this.” There is an increasing crescendo for the ECB to do more on quantative easing, he previously pledged to do so but this forum in the US is not the place for him to announce anything of significance, that has to come at an ECB policy meeting.

Once again, geo-political issues are warming up a little - difficult to handicap them in the overall equation for the outlook for interest rates though. More than 150 trucks carrying humanitarian aid from Russia crossed into Ukraine’s border today. Ukraine said the convoy entered without its consent. NATO said it saw an “alarming build-up” of Russian troops on the border as Ukraine said the arrival of what Russia called humanitarian aid amounted to an invasion. Russia has been using artillery against Ukraine forces both from its own territory and from inside Ukraine, NATO said.

Next week we are loaded with new economic reports - Treasury will auction 2s, 5s and 7yr notes, the preliminary Q2 GDP (we expect it to be revised lower from +4.0% on the advance report last month). Durable goods orders, personal income and spending, new home sales, pending home sales all due next week.

The 10yr note still holds minor bullish technicals - trying to handicap the safe haven flights into treasuries on the issues in Ukraine, Iraq and Israel and now maybe Syria against the normal economic conditions will continue to evade investors next week.

In summary, after a week filled with market moving date rates ended the week for the most part flat. I do expect given the shift in the Feds language about the economy we may see more volatility as economic date is released. It does appear to be safe to float into the weekend but do keep a close eye on the data as it comes out next week.

Keep a strong look at the markets and continue to cautiously float if you do want to take a risk. Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit me on my website at www.CallTheMoneyMan.com. I have access to real time Wall St. data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.