Mortgage Rates Slightly Better After FOMC Statement

Mortgage rates were slightly better overall today, despite the pullback that occurred this afternoon right after the Fed statement came out.

There was not much that became known when the statement came out as the rates pulled back just a tad. In the report, it stated:

• The labor market has continued to strengthen, and that economic activity has been rising at a solid rate despite hurricane-related disruptions.
•  Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters.
• Inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have declined this year and are running below 2 percent.
• Measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.
• The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further.
• In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent.
• The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

ADP jobs +235K better than 210K expected but September jobs were revised lower to 110K from 135K so the two together about where traders were thinking. Doubt whether traders are upping their job growth estimates based on the ADP data.  

Where is with construction spending? These numbers are not increasing with the hurricanes rebuild. Tomorrow weekly claims +2K to 235K as they are back in the range before the hurricanes.  With some other data and tomorrow being employment eve is likely to be another quiet session unless news from Washington roils markets.  

Tomorrow the tax cut plans, delayed today, will be released. Trump is naming it “the cut-cut-cut bill”. In the summer, I did state that there will not be a tax cut package this year, and it is beginning to look like that may be the case. Dems will not vote for it, keeping Republicans in line will not be a simple task. And tomorrow Pres. Trump has said he will announce his selection for the next Fed Chairperson - or will he?

In summary, today's Federal Reserve Policy Statement was a non-event, as both their tone and benchmark interest rate were essentially unchanged.  Bond markets recouped small morning losses following the statement.  Looks like our rising rate trend may be on hold, but I do not see much impetus for rates to improve significantly either.  Conservative borrowers should lock within 30 days of closing.  Those with a penchant for risk could float, cautiously.