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Rates Up Roughly Half a Percent in 2 Days

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We have recently spent a lot of time and space discussing the unusual mortgage interest rate environment.

  • mortgage interest rate It includes both the rate itself and the initial cost required to obtain that rate.
  • These days, the distance between any two interest rates is much smaller in terms of initial costs.
  • This makes the rate estimating environment highly tiered among lenders.
  • It also means that mortgage rates can change more sharply in response to certain movements in the bond market (bond prices are a key factor in determining mortgage rates).

The ability of bond prices to move interest rates has already been amplified, and relatively large volatility in bonds has led to register changes in interest rates. This has happened in our favor since last Thursday and has reversed as of today.The first decline in the rate lasted his 3 days (Thurs/Fri/Mon) and as of this morning the correction has been made. was broken.

If all of the above is true, we can look at bond prices (moving in the opposite direction of interest rates) and see three days of gains offset by two days of losses, leaving them at about the same level they were on Thursday morning. Data never disappoints!

In short, the improvement and deterioration half points roughly correspond to the average lender moving from 5.50% to 5.0% and back to 5.50% in 5 days. We may have had this hard round trip in the past, but not since we started keeping daily fare records in 2008.

There are no major new revelations behind the recent volatility as far as impacts are concerned. Interest rates may continue to receive guidance from economic data and his Fed reaction to it. With that in mind, tomorrow morning I bring you an important work report. It is announced before the average lender announces the rate for the day. This means more potential volatility, for better or worse.

However, despite a very strong report on the services sector, interest rates were fairly resilient today. ISM’s Non-Manufacturing PMI is one of the few leading economic reports in the United States that has the power to make a big impact on the fixed income market. This morning exceeded my expectations. Given that weak economic data played a big role in last week’s rate cut, the resilience of the bond market today was surprising when this data refuted.

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