May 2, 2018
Mortgage rates were flat to slightly higher today, depending on the lender. The average lender was quoting the same rates as yesterday, but with slightly higher upfront costs (or a lower credit, depending on your scenario). That said, if you could only choose one word to describe the movement, it would be “flat.”
The flat trajectory has been intact for 3 straight days, even though today’s events had enough street cred to cause a shift in momentum. The morning hours brought and important economic report and an even more important update on the Treasury’s borrowing needs. Rates care about Treasury issuance because it’s the foundation of the “supply” side of the supply/demand equation for bonds (and bonds dictate rates). Rates care about economic data because a stronger economy can generally support higher rates and it also increases pressure on the Fed to buy fewer bonds (reducing that “demand” side of the equation) or to hike its policy rate.
In today’s case, neither the economic data nor the Treasury’s announcement were outside the bounds of investors’ expectations. The last chance for any high drama arrived with the 2pm Fed Announcement. Investors already knew the Fed wasn’t planning on changing rates (or anything else) today, but there’s always some curiosity surrounding their choice of words. Today’s announcement was right down the middle, and rates were consequently unmoved, for better or worse.
Potential volatility remains in play tomorrow and the next day, with more economic data, including the important jobs report on Friday morning.
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