Insights and Analysis: Mortgage and Real Estate Capital Markets Update with Jeff Rosato, SVP of Capital Markets at Nationwide Mortgage Bankers
I hope everyone enjoyed the weekend! Here is this week’s update on the major bond market indices, scheduled Federal Reserve meetings, upcoming market moving economic data releases, and general bond market trends.
Market Trends and Analysis
Lock volume was lighter last week compared to what we have been seeing in recent weeks, but it was still a decent lock week. We had a total of 86 locks for $38M which is an average of 17 locks per day. So far August volume is basically flat compared to the same time in July. Our trailing 4 week daily lock average is now up to 21 per day even with the lighter week last week. The Freddie Mac average 30 year fixed rate is at 6.49% as of last Thursday, up by 2 basis points from 6.47% the prior week. That puts the max APR this week for 30 year fixed rate loans at roughly 7.99% (6.49 + 1.50). The 10 year Treasury yield closed last week at 3.89%, down by about 5 basis points on the week, and has remained below 4% for almost 3 weeks now.
“Although the market is expecting the Fed’s first rate cut in September, there still remains some degree of uncertainty around the magnitude of the cuts, and if the Fed will cut further later in the year or early next year. “
Last week mortgage rates did not move much at all. With a string of weaker economic data, primarily poor employment data, and inflation data trending in the right direction the market consensus has shifted to the expectation of the first Fed rate cut in September. Market participants will be tuning in for the Fed’s Jackson Hole Symposium this week, with Chairman Powell scheduled to speak Friday. The latest round of Fed minutes from the July FOMC meeting will also be released on Wednesday of this week. There will be several official Fed speaking engagements over the course of the week that should provide additional color on the Fed’s approach as we near the next Fed interest rate meeting on September 18th. There’s still a good amount of data to be released ahead of that next meeting which could shape the Fed’s approach. Although the market is expecting the Fed’s first rate cut in September, there still remains some degree of uncertainty around the magnitude of the cuts, and if the Fed will cut further later in the year or early next year. The market is still pricing in a total of 100-125 basis points of cuts for the year coming over the next three FOMC meetings.
Economic Indicators and Future Outlook
This week’s economic calendar is pretty light aside from all of the Fed activity. There is existing and new home sales data being released later in the week but the most important potentially market moving event will be Powell’s speech at Jackson Hole on Friday. Today MBS prices have been generally flat to better by a few basis points compared to Friday’s close, and the 10 year Treasury is down a few basis points at 3.86%.
Have a great week!
