Market Comment
Mortgage bond prices finished the week sharply lower which put significant upward pressure on rates. We started the week on a negative note Monday, remained flat through mid-week, and then worsened the remainder of the week. Inflation remained a major concern for traders, economists, and consumers. Rising gas and grocery prices weighed heavily on the financial markets. The data was mixed but did little to alleviate inflation fears. Industrial production fell 1.3% vs an expected 0.3% increase. Capacity use was 75.2% vs 76.6%. NAHB housing was 80 vs 76. Housing starts were 1555K vs 1635K. Weekly jobless claims were 290K as expected. Philadelphia Fed was 23.8 vs 26. Existing home sales were 6.29M vs 6.3M. LEI rose 0.2% vs 0.5%. Mortgage interest rates finished the week worse by approximately 3/4 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| FHFA House Price Index | Tuesday, Oct. 26, 10:00 am, et | Up 1.4% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Oct. 26, 10:00 am, et | 110.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales | Tuesday, Oct. 26, 10:00 am, et | 763K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Durable Goods Orders | Wednesday, Oct. 27, 8:30 am, et | Down 0.2% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Q3 GDP | Thursday, Oct. 28, 8:30 am, et | Up 3.3% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, Oct. 29, 8:30 am, et | Up 0.3%, Up 0.6% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Oct. 29, 8:30 am, et | Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Q3 Employment Cost Index | Friday, Oct. 29, 8:30 am, et | Up 0.9% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Oct. 29, 10:00 am, et | 71.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
A Sure Thing
Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. While analysts constantly try to predict the future, the bottom line is they continually fall short in terms of accuracy. The Fed is a prime example of this. They constantly adjust inflation expectations and rate hikes and cuts accordingly.
The great news is that mortgage interest rates remain historically very favorable despite some recent volatility. The rates today are a sure thing. Floating is risky. The Fed is expected to taper their MBS purchases at some point soon and inflation fears are increasing. Caution is key.