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Market
Comment
Mortgage bond prices finished the week a little higher, which put some downward pressure on rates. Rates remained volatile but with the swings being less in magnitude. Weak data reversed some of the recent MBS selling pressure as stocks struggled at times. The stock retreat came amid investor reassessments of heavy AI spending. Rising oil prices, driven by fresh Middle East tensions that pushed Brent crude near $112 a barrel, reignited inflation concerns and tempered some of the flight to safety buying of mortgage-backed securities. Weekly ADP employment was 18.5K vs 24.75K the prior week. Leading economic indicators were unchanged vs down 0.1%. Weekly jobless claims were 194K vs 200K. Consumer sentiment was 48 vs 46.3. Mortgage interest rates finished the week better by approximately 1/4 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Durable Goods Orders |
Tuesday, Oct. 27,
8:30 am, et
|
Up 0.6%
|
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
s
|
| FHFA House Price Index |
Tuesday, Oct. 27,
10:00 am, et
|
Up 0.3%
|
Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates.
|
| New Home Sales |
Tuesday, Oct. 27,
10:00 am, et
|
660K
|
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
|
| Fed Meeting Adjourns |
Wednesday, Oct. 28
2:15 pm, et
|
No rate changes
|
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
|
| Personal Income and Outlays |
Thursday, Oct. 29,
8:30 am, et
|
Up 0.3%,
Up 0.3%
|
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
|
| PCE Core Inflation |
Thursday, Oct. 29,
8:30 am, et
|
Up 0.3%
|
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
|
| Q3 Employment Cost Index |
Friday, Oct. 30,
8:30 am, et
|
Up 0.8%
|
Very important. A measure of wage inflation. Weakness may lead to lower rates.
|
All Eyes on the Fed
The Federal Open Market Committee meeting this week will garner significant attention. No rate changes are expected at this meeting as oddsmakers put the odds of the Fed holding at 92% to 94% and the odds of a hike in the low single digits. However, the odds of another Fed hike at the December 9th meeting remain more than 80%.
Fed Chair Warsh has been reluctant to provide forward guidance however other Fed officials continue to opine on things to come. Warsh declined to provide a dot plot of his projections at the last meeting but did release the projections of the 18 other participants. Most Federal Reserve members expect inflation to remain persistently elevated above their 2% target through the end of 2026 and into the near future. Mortgage interest rates will likely remain elevated until the Fed pivots. Analysts generally expect the Fed to shift from its current restrictive stance toward rate cuts only if the economy enters a clear downturn, the labor market weakens materially, or significant stress develops in credit markets.
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