What a difference a month makes. In May, stocks fell sharply, and interest rates declined each week. June has been a different story. The Fed has signaled rate cuts are likely coming. Stocks have been rallying higher, and the decline in interest rates has stalled.

The Fed can’t control home loan rates. Those move mainly on inflation and expectations of inflation in the future. Inflation has remained tame for the past decade and is the main reason why home loan rates have stayed low as well.

This past week, we received another reading on consumer inflation, the Consumer Price Index (CPI), which confirmed there are no price pressures or inflation threat to the economy.

The result: the odds of a Fed rate cut have climbed to 85% for the July Fed Meeting on the idea that the Fed can comfortably cut rates and “allow” inflation to creep into the economy.

Also keeping home loan rates near two-year lows is the uncertainty and lack of resolution with the US/China trade turmoil. The next step is a potential meeting between US and China at the G20 Meeting June 28-29. Mark your calendar. This is an important event, because as this trade dispute goes so do the economies around the globe.

Bottom line — we are seeing a strong economy, rising stocks, and two-year lows for home loan rates.

The upcoming week will see data from the housing and manufacturing sectors, but those reports will take a backseat to the two-day Federal Open Market Committee (Fed) meeting.

The meeting kicks off on Tuesday and ends Wednesday with the release of the monetary policy statement which will also include a summary of economic projections. Fed Chair Powell will hold a press conference immediately following the release at 2:30 p.m. ET.

There is no rate cut expected at this meeting, but what comes of the Statement and press conference could move the markets — so stay tuned.

The markets will also have to contend with the continued saga surrounding the US/China trade issues.

Reports to watch:

  • Manufacturing data comes from Monday’s Empire State Index followed by Thursday’s Philadelphia Fed Index.
  • On Tuesday, Housing Starts and Building Permits will be released with Existing Home Sales being delivered on Friday.
  • As usual, Weekly Initial Jobless Claims will be released on Thursday.

Source: Vantage

Related Articles

Since the outbreak of COVID-19 in the United States 3 months ago, many of our normal routines have been altered on a collective level. Companies such as Homebridge are no exception. Throughout the past several weeks, Homebridge has been taking massive steps to ensure that its associates are safe and…
Read More of the post How Homebridge is Responding to COVID-19

One week after home loan rates failed to improve further in the face of multiple bond-friendly stories, such as low inflation, high unemployment claims, and the Fed's continued commitment to purchase bonds, we watched home loan rates tick up this past week. Why? Oversupply. The U.S. Treasury announced they will…
Read More of the post A Lesson in Supply and Demand

Home loan rates continue to hover near all-time lows, but there are three reasons why they should have improved but didn’t. Let's take a look at some of the “bond-friendly” news from this week that was unable to push mortgage-backed security (MBS) prices higher and home loan rates lower. Unemployment: The…
Read More of the post Is This the Bottom?

One of the major effects of the coronavirus was the enormous destabilization of the mortgage-backed securities (MBS) market back in mid-March. MBS pricing and trading activity determine home loan rates, so a big and fast solution was necessary. Thankfully, the Federal Reserve quickly came to the rescue by purchasing MBS…
Read More of the post Stabilization in the MBS Market

We recognize this is a difficult time for many people. Click here or call 866-913-2951 for more information and to learn about current options available to our borrowers.