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.
Lock Volume and Mortgage Rates
Last week was a great week for lock volume! We had a total of 102 locks for $43M in four days with the holiday in there last Wednesday. That’s an average of 25 locks per day and one of our best lock weeks in months. Our trailing 4 week daily lock average has ticked up to 20 per day! So far lock volume in June is up about 8% compared to the same time in May. The Freddie Mac average 30 year fixed rate is at 6.87% as of last Thursday, down by 8 basis points from 6.95% the prior week. That puts the max APR this week for 30 year fixed rate loans at roughly 8.37% (6.87 + 1.50). The 10 year Treasury yield closed last week at 4.26%, up by about 4 basis points on the week, and is currently up slightly today to 4.27%.
“Mortgage rates declined slightly last week and average 30 year fixed rates remained slightly below 7% for the third week in a row.“
Market Trends
Mortgage rates declined slightly last week and average 30 year fixed rates remained slightly below 7% for the third week in a row. Last week’s economic releases did not really move the market as much as releases earlier in June did and it was a fairly quiet week. Retail Sales in May did come in lower than market expectations and the report signaled some softening in the economy that the Fed has been looking for. Overall market expectations have shifted to just one rate cut expected this year with the most likely scenario being a .25% rate cut at the November or December FOMC meeting. The Fed will need to see a few months in a row of not just flat inflation data, but the resumption of declines in the headline numbers before making cuts. Last week’s retail sales data may be the first in a string of consecutive weaker economic reports that along with lower inflation will shift the Fed’s outlook on rate cuts. However, the current expectation is for the first rate cut to not come until November.
Sensitivity to Economic Data
This week there is more fresh economic data being released with Q1 GDP revision on Thursday and Income & Spending on Friday. The release with the most market moving potential will be the PCE Index on Friday. This is the Fed’s preferred gauge of inflation, and the market will be looking for continuing declines in the numbers. The Fed presidents and governors will be making the rounds with speaking engagements throughout the week as well. Investors will be looking for any changes in the overall tone and strategy of the Fed as they digest the week’s data.
Current Market Conditions
Today MBS prices are generally flat compared to Friday’s close and the market is not moving. The 10 year Treasury is up a basis point to 4.27%. Today is a quiet day for the market, but things will get busier this week as data is released and Fed speakers make their rounds.
See you next week for the next update. Have a great week!
