Mortgage Rate News for Friday, October 31, 2014 – Halloween Edition

Mortgage rates ticked back up over the past week, according to Freddie Mac’s Primary Mortgage Market Survey.  The average rate on a 30-year fixed-rate mortgage rose 6 basis points to 3.98%. Rates remain just above the lows of the year.  This is a minor fluctuation, and endeavoring to determine the root causes of the fluctuation is most likely a fool’s errand (one of my favorite type of errands).  We’re seeing some rate deterioration this morning (more on that below the fold), but fundamentally, very little has changed from an economic perspective over the past few months, and I would be surprised if we see mortgage rates deviate much from their current range in the near future.
 
Today’s Economic Data:

Before we get to today’s domestic data, it’s worth noting that the Bank of Japan unexpectedly announced additional stimulus measures last night, which put pressure on U.S. Treasuries in overnight trading.  It appears that we’ve recovered a lot of the ground that was lost, but this is one of the reasons that mortgage bonds have sold off this morning.  If you really want to get into the weeds on this one, I’d recommend starting with this Bloomberg article.  If you want to delve further, here’s some insightful commentary from Across the Curve – warning: it gets technical.

Beyond that, the most influential numbers of the day are within the Personal Income and Outlays report.  Everything came in more or less in line with expectations, and the main takeaway is that – and this will shock you – inflation is low, and not showing any real signs of picking up in the near future.  The Fed is under no real pressure to act anytime soon.

Chicago PMI came in above expectations, as did Consumer Sentiment.  Bonds appear to be losing some ground in the wake of these numbers, but again, I don’t anticipate that we’ll see much change in rates over the next few days.  The next real risk to rates is likely next Friday’s employment report.

Today’s Idle Fed Speculation:

I think we’ve spilled enough virtual ink on the Fed, and honestly, I’m finding it difficult to gin up the enthusiasm to repeat myself over and over this morning.  As expected, the Fed announced the end of the QE program, but retained forward guidance language saying that policy will remain accomodative for a “considerable time.”  If you want to read more, I’d highly suggest reading Tim Duy’s recap of the Fed statement from earlier in the week.


For the purposes of mortgage rates, it’s pretty much the status quo for right now, and there is no real clarity on the timing of a rate hike in 2015.  The Fed is keeping its options open.  Everything is data dependent*.

*Saying that something is data dependent strikes me as very much in the same vein as saying a given athlete is day-to-day. Almost everything in life is data dependent.  What I have for lunch is data-dependent.  My route home is data dependent.  The pair of pants I chose to wore this morning – yup, that choice was data dependent.  /end rant. 

Events that May Impact Rates This Week:

Monday:

    Pending Home Sales: Pending homes sales were up 0.3% from August to September.

Tuesday:

    Durable Goods Orders: Headline anticipated: +0.9%, headline actual: -1.3%.  Core anticipated: +0.5%, core actual: -0.2%.
    S&P Case-Shiller Home Price Index: 20-city, seasonally adjusted anticipated: +0.1%, actual: -0.1%.  20-city not seasonally adjusted anticipated: +0.4%, actual: +0.2%.
    Consumer Confidence: expected: 86.8, actual: 94.5.

Wednesday:

    FOMC Meeting

Thursday:
    GDP: Expected: 3.0%, actual: 3.5%.
    Weekly Jobless Claims: Expected: 280k, actual, 287k

Friday:

    PCE Price Index: Expected: +0.1%, actual: +0.1%.
    Core PCE Price Index: Expected: +0.1%, actual: +0.1%
    Chicago PMI
    Consumer Sentiment

source: totalmortgage.com