This past week had little economic data for the financial markets to react to. As a result, home loan rates have inched higher though they remain near multi-year lows.
It is normal to see quiet sideways trading action in the summer months, especially with the U.S./China trade war punting into the future and the Fed about to cut rates at month’s end. Traders are more apt to sit on their hands and wait for the next directional move in the financial markets.
What should we expect next for home loan rates? Volatility. Long, boring and complacent sideways trading patterns like we are seeing in mortgage bonds are typically followed by an increase in volatility, and a sharp breakout one way or the other.
How mortgage bonds respond to the Fed Statement and rate cut on July 31 may very well determine the next directional move in home loan rates.
Bottom line: anyone looking to either refinance or purchase a home would be wise to be ready to lock in the next couple of weeks. A Fed rate cut doesn’t guarantee that home loan rates will move lower. In fact, ever since the probability of a Fed rate cut hit 100%, home loan rates ticked up a bit.
The upcoming week looks to be on the slow side once again, so the sideways summer trend in rates may continue for one more week.
There is little economic data being released and Fed members will not be speaking during this blackout period prior to the July 31 Fed meeting where a Fed rate cut is fully expected.
A wildcard, which could spark the volatility, could be fresh U.S./China trade headlines.
Reports to watch:
- Housing data will come from Tuesday’s release of Existing Home Sales followed by Wednesday’s New Home Sales.
- Durable Orders and Weekly Initial Jobless Claims will be released on Thursday.
Source: Vantage