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CHINA TRADE AND FED COULD PUSH VOLATILITY INTO RATE MARKETS

    

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TODAY'S MORTGAGE RATE SUMMARY

HOW RATES MOVE:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. 

Saddle up everyone, because we are in for a bumpy ride!

RATES CURRENTLY TRENDING: NEUTRAL

Mortgage rates are moving sideways so far today.  The MBS market was down -15bps yesterday. This was enough to push rates or fees slightly higher on moderate volatility.

TODAY'S RATE FORECAST: NEUTRAL

Fed: We get a large dose of Fed Speak today with John Williams, Mary Daly, James Bullard, Richard Clarida and Patrick Harker as they all speak at a U.S. Monetary Forum. We will be looking for more discussions on their balance sheet.

Trade War: Day 5 of the D.C. meetings continue. Today the Chinese Vice Premier Liu He will meet with President Trump at 2:30 pm ET followed by a press conference. It is still unclear how much progress has been made on the 6 key areas of negotiations, but the consensus is that enough progress has been made that would give President Trump enough cause to push back the March 1st deadline for the tariff increases.

Brexit: After once again failing to get any concessions out of the EU, Britain's PM Theresa May has only 36 days until the 2 years that was started by evoking "Article 50" ends. That is the deadline for what would be a "hard" Brexit. It appears as if the only two options that she now has is to pass a 3-month delay through her parliament or to proceed with a hard Brexit.

Germany: GDP 4th QTR (2nd release) 0.0% vs est of 0.0%/YOY 0.9% vs est of 0.9%

Eurozone: CPI YOY 1.4% vs est of 1.4%/Core CPI YOY 1.1% vs est of 1.1%

TODAY'S POTENTIAL RATE VOLATILITY: AVERAGE TO HIGH

Rate markets are likely to be on hold most of the day until the press conference with President Trump and Chinese V.P. He.  However, anything unexpected could inject a lot of volatility in the market and push rates higher.

BOTTOM LINE:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact me today!

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