We got some economic data out this morning, which was positive, but we’re still seeing Treasury yields and mortgage rates dip down a little after some statements from the Fed. Tax reform is still in the spotlight, so any statements that shed light on the future of that bill will likely have an effect on rates. Read on for more details.
Where are mortgage rates going?
Rates slightly lower today
Mortgage rates are dealing with some mild downward pressure this morning. Investors are still mostly in wait and see mode for more information on the Republican led tax reform effort.
That bill is currently up for debate in the Senate, and a House vote is expected to take place later this week. Optimism about corporate tax cuts has fueled a rally in stocks over the past couple weeks, but we’ve seen that sentiment tempered over the past several days as some doubts about the bill’s timeline creep in.
It’s been the goal of President Trump’s for the Republicans to pass the bill through the House by Thanksgiving.
There hasn’t been too much said about the plan this week, but last night, Treasury Secretary Steven Mnuchin did state very clearly that the corporate tax rate will not go above 20%.
Here it is in his own words: “It’s not going up. I can tell you this is one of the things the president feels very strongly about.” Any further comments on the matter could likely influence the direction of the market and mortgage rates today and for the rest of the week.
Current Fed Chair Janet Yellen spoke to a European Central Bank panel early this morning, making several interesting comments on the relationship between the Fed, its members, and market participants.
Yellen expressed her concern that having such high number of officials on the Federal Open Market Committee makes it hard to avoid confusion about the future of monetary policy.
With so many members (19), some of whom have widely differing views on what type of policy action should be taken, the dialogue can become muddled. While she didn’t call out any officials by name, she did make it very clear that some have not been communicating as effectively as she’d like, stating:
“Individuals should be explaining in their speeches, elaborating what’s on the (Fed’s decision) statement and explaining what we have agreed upon. We agreed that having done that, individuals can go out and explain their individual perspectives… I would say that guidance hasn’t been totally faithfully followed, although many of my colleagues do try to do that, and the press tends to pick up on differences, (which is) particularly difficult when we have an upcoming policy decision.”
No concrete solution was offered to the problem as Yellen admitted that it’s a “work in progress.”
Mortgage rates are down a touch today, which is great news for anyone looking to purchase a new home or refinance their current mortgage rate.
Given that rates are still expected to rise over the long-term, we recommend that borrowers lock in a rate sooner rather than later. If you choose to float today, there is the definite risk that rates will be higher in a week’s time.
Today’s economic data:
- Fed Chair Janet Yellen at 5:00am
- St. Louis Fed President James Bullard at 8:30am
Producer prices for October jumped 0.4%, putting them at 2.8% year over year. Producer prices less food and energy also rose 0.4%, bringing them to 2.4% year over year. PPI-FD less food, energy, and trade services ticked up 0.2%, making it 2.3% year over year. Overall, it’s a strong report is a welcomed surprise to investors.
Notable events this week:
- Consumer Price Index
- Retail Sales
- Empire State Mfg Survey
- Business Inventories
- EIA Petroleum Status
- Jobless Claims
- Philly Fed Business Outlook Survey
- Import and Export Prices
- Industrial Production
- Housing Starts
- Kansas City Fed Manufacturing Index
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