Weekly Recap and the Financial Markets
Mortgage rates fell enough Friday to undo the earlier week’s damage and remained unchanged for the week but the week was not short on volatility. For four days we saw bigger-than-average moves. Tuesday and Wednesday alone pushed rates more than an eighth of a point higher. But Friday and Monday’s improvements were enough to offset the weakness.
Rates benefited from weaker economic data; specifically Friday’s first reading on Q4 GDP that was weaker than expected.
4.25% remains the most prevalent quote on top tier conventional 30yr fixed scenarios. A few lenders did move back down to 4.125% while others moved back to 4.25% from 4.375%. Most experts feel that locking is still the best option for all purchase loans closing within 30 days. Despite the bounce back to end the week, it remains the case that rates will have a hard time recovering much of the post-election spike because markets are waiting to see how the new administration’s policies affect growth and inflation. There’s little incentive for rates to fall unless inflation and economic growth are also falling.
This upcoming week is packed with important releases. On Wednesday the week’s bigger potential market movers begin to hit. They’ll be fairly well spaced-out with ADP Employment early, ISM Manufacturing at 10am, and the FOMC Announcement at 2pm.
This particular FOMC Announcement isn’t on the same level as recent meetings. There’s no concomitant press conference or update on economic projections (the thing that really moved markets after the December meeting). Rather, investors will only be able to scan the statement for verbiage changes that might hint at any evolution of thinking among Fed members. In other words, while the Fed Statement should always be respected for its potential impact, this is one of those that might end up being a dud.
From there, markets chart a course for NFP on Friday morning and ISM Non-Manufacturing PMI 90 minutes later. Thursday is a bit of an intermission in the context of the week’s heavier hitting reports.
Then Friday hits us with the payroll reports and data. Be looking for possible roller coaster rides in rates this week.
Posted on January 30, 2017 at 5:13 pm by Rob Williams