After holding steady last week, a quiet economic calendar will give geopolitics and COVID-19 news updates a greater influence on yields.
Mortgage rates were mixed in the week ending 17th September. Following a tumble to a new record low, 30-year fixed rose by 1 basis point to 2.87%. In the week prior, the 30-year fixed had fallen by 7 basis points to 2.86%.
Compared to this time last year, 30-year fixed rates were down by 86 basis points.
30-year fixed rates were also down by 207 basis points since November 2018’s most recent peak of 4.94%.
Economic data was on the busier side in the 1st half of the week.
Key stats included August industrial production and retail sales figures and September NY Empire State Manufacturing Index numbers.
It was a mixed bag on the economic data front. While retail sales and industrial production saw further upside, both fell short of forecasts.
A pickup in NY State manufacturing sector activity was the only positive.
The stats had a limited impact on the yields, however. It was the FED’s monetary policy decision, projections, and Powell press conference that pinned back yields.
A particularly dovish outlook on interest rates weighed on U.S Treasury yields on Wednesday, pinning mortgage rates back.
Based on the FOMC projections, the FED sees interest rates holding at close to 0% until 2023. The markets had not anticipated such an accommodative stance by the FED. Ultimately, it was a reflection of the concerns over the economic outlook.
The weekly average rates for new mortgages as of 10th September were quoted by Freddie Mac to be:
According to Freddie Mac,
For the week ending 11th September, rates were quoted to be:
Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan application volume, fell by 2.5% in the week ending 11th September. In the week prior, the Index had increased by 2.9%.
The Refinance Index declined by 4% from the previous week and was 30% higher than the same week a year ago. In the previous week, the index had increased by 3%.
The refinance share of mortgage activity slipped from 63.1% to 62.8%. In the week prior, the share had increased from 62.5% to 63.1%.
According to the MBA,
It’s a quieter 1st half of the week on the U.S economic calendar.
Key stats include September’s prelim private sector PMIs due out on Wednesday.
We would expect plenty of sensitivity to the numbers following the FED dovish outlook on monetary policy and the economic recovery.
Away from the economic calendar, geopolitics and COVID-19 will also be in focus. The markets will need to track chatter from Beijing and Washington and on Brexit.
Last week’s COVID-19 spikes will also be an issue should there be further spikes across the U.S, the EU, and other parts of the world.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.