Insights and Analysis: Mortgage and Real Estate Capital Markets Update with Jeff Rosato, SVP of Capital Markets at Nationwide Mortgage Bankers.
Key Takeaways: Bond Market Trends and Fed Outlook
In this week’s market update, mortgage rates have been trending downward, with the 30-year fixed rate now at 6.08%. The Federal Reserve is closely watching economic data, particularly this week’s employment reports, which will help guide their decisions on future interest rate cuts. Inflation data from August shows a continued decline, supporting the Fed’s recent rate cut. This week, several Fed officials, including Chairman Powell, will give speeches that could provide more insight into upcoming rate changes. Overall, the bond market is stable.
I hope everyone enjoyed the weekend! Here’s 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.
The Fed will remain dependent on more economic data to drive its strategy, and this week, the focus will be on employment data. The ADP employment report is scheduled for Wednesday, followed by the official U.S. Non-farm Payrolls report on Friday.
Market Trends and Analysis
Last week saw an average level of new lock volume, with 98 new locks totaling $46M, averaging just under 20 locks per day. Our trailing four-week daily lock average is now at 20 per day! With today being the final day of September, we expect lock volume to finish slightly higher compared to August. This marks the fourth consecutive month of increasing lock volume, which is a great sign!
As of last Thursday, the Freddie Mac average 30-year fixed rate stands at 6.08%, down just 1 basis point from the previous week. This puts the maximum APR for 30-year fixed-rate loans at around 7.58% (6.08% + 1.50%). The 10-year Treasury yield closed last week at 3.75%, up by 1 basis point.
Last Friday, the PCE Index, the Fed’s preferred measure of inflation, was released and showed that inflation in August remained on a downtrend, rising by just 0.1% month-over-month. Year-over-year core inflation came in at 2.1%, slightly below the 2.2% expectation, continuing to move toward the Fed’s 2% target. This fresh inflation data supports the Fed’s decision to cut its benchmark rate by a larger-than-expected 50 basis points two weeks ago. Additionally, positive revisions to previous consumer spending data suggest the economy may not be as close to a recession as some economists feared.
Economic Indicators and Future Outlook
The Fed’s focus this week will be on employment data. The ADP report comes out Wednesday, followed by the U.S. Non-farm Payrolls on Friday. September’s employment data will be crucial in shaping market expectations for the November FOMC rate decision. Currently, market sentiment is evenly split between a 25-basis-point cut and a 50-basis-point cut. Mortgage rates have dropped by nearly a full point since late July, with the downward trend expected to continue. Fed Funds futures are currently pricing in an additional 75 basis points of cuts this year across the two remaining Fed meetings in November and December.
This week features several Fed speaking engagements, starting with Chairman Powell today at 1:55 PM at an economic conference. His remarks, along with speeches from other Fed officials throughout the week, should provide more clarity on the size of the remaining rate cuts this year. As of this morning, MBS prices are down slightly by a few basis points from Friday’s close, and the 10-year Treasury yield has risen by a few basis points to 3.77%.
We’ll continue tracking the market for any changes—be sure to check in next week for the latest insights! Have a great week!
Last Friday, the PCE Index, the Fed’s preferred measure of inflation, was released and showed that inflation in August remained on a downtrend, rising by just 0.1% month-over-month. Year-over-year core inflation came in at 2.1%, slightly below the 2.2% expectation, continuing to move toward the Fed’s 2% target. This fresh inflation data supports the Fed’s decision to cut its benchmark rate by a larger-than-expected 50 basis points two weeks ago. Additionally, positive revisions to previous consumer spending data suggest the economy may not be as close to a recession as some economists feared.
Economic Indicators and Future Outlook
The Fed’s focus this week will be on employment data. The ADP report comes out Wednesday, followed by the U.S. Non-farm Payrolls on Friday. September’s employment data will be crucial in shaping market expectations for the November FOMC rate decision. Currently, market sentiment is evenly split between a 25-basis-point cut and a 50-basis-point cut. Mortgage rates have dropped by nearly a full point since late July, with the downward trend expected to continue. Fed Funds futures are currently pricing in an additional 75 basis points of cuts this year across the two remaining Fed meetings in November and December.
This week features several Fed speaking engagements, starting with Chairman Powell today at 1:55 PM at an economic conference. His remarks, along with speeches from other Fed officials throughout the week, should provide more clarity on the size of the remaining rate cuts this year. As of this morning, MBS prices are down slightly by a few basis points from Friday’s close, and the 10-year Treasury yield has risen by a few basis points to 3.77%.
We’ll continue tracking the market for any changes—be sure to check in next week for the latest insights! Have a great week!
