Rates Ping-Pong as Market Waits on Fed & Jobs
Just since Thursday's release of Freddie Mac’s survey of average mortgage rates we’ve seen rate volatility bounce up and down like a ping-pong ball. Freddie Mac’s survey reported a moderate increase in rates for the week. Friday showed a little improvement, then Monday we saw a sell-off in the bond market, which caused rates to rise rather sharply.?
Tuesday, however, worries about what’s next for the banking sector led investors to move out of stocks into bonds, driving the bond prices higher. When bond prices rise, mortgage rates often improve meaning they move lower. We saw Monday’s rise in rates to the highest levels in more than a month get erased on Tuesday, improving back down to Friday’s levels.?
This past week is a great example of the kind of swings we’re seeing with rates lately and why it’s a great strategy to work with a broker like me when you’re ready to make your next home purchase. I watch these trends daily and can be shopping on your behalf and jump on great rates when they happen like they have earlier this week. Please reach out to me and let’s come up with a great plan for you! You can always reply to this email or call/text me at 818.307.6072.?
Sam Khater, Freddie Mac’s Chief Economist remarked on Thursday that “...with the rate of inflation decelerating rates should gently decline over the course of 2023.” And with that, we could see a greater influx of buyers into the housing market.?
As for this week, we have a very important Fed Meeting happening Tuesday and Wednesday with the announcement and press conference happening Wednesday afternoon. After slowing the pace of rate hikes to 25 basis points from 50 points at their two prior meetings, the Fed is expected to raise rates by another 25 points at the May meeting. Traders will be very interested in what the Fed has to say about the economic outlook and direction of inflation.?
Speaking of inflation, Friday’s release on the Fed’s favorite inflation report, the PCE Index revealed that the rate of inflation increases both monthly and annually have slowed to 0.1 percent per month and 4.2 percent per year; down from 0.3 percent and 5.1 percent.?
Also on Friday, we get the month’s most anticipated economic report, the monthly Jobs Report. Expectations are for 178,000 rise in new jobs in April versus an as-expected 236,000 in March. Average hourly earnings (i.e., wage inflation) in April are expected to rise 0.3 percent on the month for a year-over-year rate of 4.2 percent; these would match March's rates. April's unemployment rate is expected to rise from 1 tenth to 3.6 percent.
Any surprises in this data - and there’s lots of it - could cause more mortgage rate volatility. I’ll be watching it all for you and please reach out if I can help you make sense of it all.?