Newsletter-September 26th, 2022    
Provided by
Robin Dunbar Bain
Robin Dunbar Bain
NMLS # - MLO18699
NMLS # - MB1498

Premiere Mortgage Services, Inc.
11 Malvern Hill Road
Sterling, MA 01564
Phone: (978) 422-2311
E-Mail: robin@bainmortgage.com
   
 

Market Comment

Mortgage bond prices finished the week significantly lower which put upward pressure on rates. We started on a negative note ahead of the Fed meeting and only saw a slight reprieve from the selling pressure at pricing Wednesday morning. The Fed raised rates 75 basis points as expected and estimated additional rate hikes were likely into the end of the year and beyond. Fed projections for the Fed Funds Rate were 4.4% by the end of 2022 and 4.6% by the end of 2023. Chair Powell indicated price stability is the "bedrock" of the economy and that the Fed will take a restrictive stance for some time to eventually get inflation to their 2% target. The data varied but was overshadowed by inflation fears. Housing starts were 1575K vs 1420K. Existing home sales were 4.8M vs 4.73M. Weekly jobless claims were 213K vs 215K. Mortgage interest rates finished the week worse by over a full discount point.
 


LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

Durable Goods Orders

Tuesday, Sept. 27,
8:30 am, et

Up 0.2% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
FHFA House Price Index

Tuesday, Sept. 27,
10:00 am, et

Down 0.1%

Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates.
Consumer Confidence

Tuesday, Sept. 27,
10:00 am, et

104.0

Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
New Home Sales

Tuesday, Sept. 27,
10:00 am, et

499K

Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Q2 GDP

Thursday, Sept. 29,
8:30 am, et

Down 0.6%

Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Personal Income and Outlays

Friday, Sept. 30,
8:30 am, et

Up 0.3%,
Up 0.2% 

Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation

Friday, Sept. 30,
8:30 am, et

Up 0.4%

Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
U of Michigan Consumer Sentiment

Friday, Sept. 30,
10:00 am, et

59.5

Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

PCE 

The US Department of Commerce’s Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures. PCE is significant in that the Fed uses it in determining inflation as opposed to the prior use of the consumer price index. The PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers. The Fed continues to state that getting inflation in check is their primary concern.

Be cautious heading into the release. Data can surprise the financial markets from time to time.  Mortgage interest rates will likely spike higher in the short term if the PCE core reading is higher than expected. A reading in line with expectations will likely help rates stay in check.

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   MORTGAGE MARKET IN REVIEW Newsletter-September 26th, 2022