Mortgage bond prices finished the week higher which helped rates remain near unchanged to slightly lower. Rates were volatile almost the entire week. We started the week with rates improving following weaker than expected data. New home sales were 593K versus the expected 645K. That reversed Tuesday with stronger than expected consumer data. Consumer confidence was 130.8 versus the expected 126.5 mark. Q4 GDP rose 2.5% as expected which basically garnered very little reaction. Core PCE rose 0.3% as expected. ISM Index was 60.8. Call today for a free rate quote!
Analysts expected a reading of 58.4. Weekly jobless claims were 210K. Analysts looked for a reading of 227K. Stocks experienced sharp selling pressure Thursday and Friday. We ended the week unchanged to better by approximately 1/8 of a discount point.
President Trump ignited fears of a trade war last week after he announced his intention to impose tariffs on all steel and aluminum imports. Stocks were hit hard with selling pressure after the moves were announced. The bond market didn’t escape the volatility either. Tariffs can fan inflation fears as the price of materials will likely increase. In addition, tariffs can result in other countries retaliating and placing their own tariffs on goods the U.S. exports. Inflation, real or perceived, erodes the value of fixed income investments such as mortgage-backed securities. This causes prices to fall and rates to rise. Call today for a free rate quote!
Fed Chairman Powell recently stated “there is no evidence the economy is currently overheating.” However, he said the Fed was still poised to continue the gradual rate increases. Right now it looks like the Fed may raise rates three or four times this year. So in a few days we progressed from the fear of inflation and the Fed raising rates again this month to additional inflation fears tied to possible trade wars.
Mortgage interest rates remain historically favorable. Floating in this environment is very risky. Call today for a free rate quote!