Welcome to the TMS current mortgage rates blog. There’s some economic data out today, but first, your mortgage rate forecast/advice.
Where are mortgage rates going?
The markets kicked off March with a huge rally yesterday, as the Dow Jones, NASDAQ, and the S&P 500 all posted over 2% gains, and the price of oil climbed to its highest peak in nearly two months at $37 a barrel. The price increase was largely due to a freeze in output from countries like Russia, Saudi Arabia, Qatar, and Venezuela.
Historically, the week of Super Tuesday has a decent chance at a rally, as investors get a better idea of who the nominees will be. With Donald Trump and Hillary Clinton pulling out ahead of their competitors, the markets can be fairly certain that these will be the nominees and make their investments as they see fit. Will that actually cause a sustained rally is something that we’ll have to wait and see. So far, the answer seems to be no.
Is March the month the U.S. economy turns things around? After a dismal January and February, that’s certainly what investors would like to believe. All we can do is take it one day at a time, and today, we’re back down in the red. Late Tuesday the American Petroleum Institute released data that showed crude oil supplies rose by 9.9 million barrels–the biggest inventory build in 11 months. The data is offsetting Tuesday’s gains from the output freeze.
The March FOMC meeting starts two weeks from today, and while there has been some data released recently that points to a stronger economy (inflation up, consumer spending stable, manufacturing not declining as sharply), it still seems highly unlikely that any change in monetary policy will take place then. If we look at the Fed Fund futures, which reflect the market’s assessment of the probability of a rate hike, we can see that it currently has the likelihood of a March hike at 0%.
Clearly, those aren’t very good odds. There are a few dissenters that still think the Fed should hike, but it seems inevitable that they will. While the jobs report comes out this Friday, I don’t think an impressive reading–which it seems we might get (see below)–would be enough to influence monetary policy. What it will do is help determine the language the Fed uses to frame future decisions.
There are a few dissenters that still think the Fed should hike, but it seems inevitable that they will. While the jobs report comes out this Friday, I don’t think an impressive reading–which it seems we might get (see below)–would be enough to influence monetary policy. What it will do is help determine the language the Fed uses to frame future decisions.
The U.S. 10-year Treasury note rallied with the rest of the market yesterday, which closed nearly 10 basis points higher than Monday at 1.83%. It was the first time in two weeks the yield finished over 1.80%. Right now it’s trading around 1.86%. Mortgage rates typically follow the 10-year yield so we could see rates edge higher this week.
What does this mean for me?
Mortgage rates resumed their decline last week, but with the stock market up this week, and the 10-year yield rising, it seems like they might tick up a few basis points this week. Fortunately, they’re still at very appealing levels. In any case, if you’ve been thinking about purchasing a new home or refinancing your current mortgage, it would be prudent to act sooner rather than later.
Today’s economic data:
ADP employment report comes in strong
The ADP employment report released today has 214,000 private sector jobs added in February. That’s well above the consensus for 185,000. The numbers in the ADP report are by no means guaranteed to be reproduced in the Bureau of Labor Statistic’s report on Friday, but it’s also not out of the question.
The Beige Book is set to be released at 2:00 PM, and will potentially offer some clues into how the Fed will be thinking about monetary policy at the upcoming meeting. The book is compiled by a rotating Fed district bank and is filled with anecdotal evidence that reflects how each economy from the 12 Fed districts is performing.
- Pending Home Sales Index
- Dallas Fed Manufacturing Survey
- Chicago PMI
- PMI Manufacturing Index
- ISM Manufacturing Index
- Construction Spending
- ADP Employment Report
- Beige Book
- Weekly Jobless Claims
- Factory Orders
- ISM Non-manufacturing Index
- International Trade
- Nonfarm Payrolls