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Thursday, February 09, 2023

Market Commentary

Updated on February 8, 2023 10:09:33 AM EST

Yesterday’s afternoon trading was heavily influenced by Fed Chairman Powell’s words during his public speaking engagement in Washington D.C. The markets initially reacted favorably to his comments that indicated inflation was starting to ease, but that was followed by a negative move when he warned that stronger than expected economic data in the future could lead to more Fed rate hikes than the markets are currently expecting. We saw some lenders revise rates intraday as the markets whipsawed back and forth. The net impact on mortgage rates can be labeled neutral though.

As expected, President Biden’s State of the Union speech has had a little impact on this morning’s trading.

There is no relevant economic data scheduled for release this morning. We do have the 10-year Treasury Note auction taking place that may come into play during early afternoon trading. This type of sale gives us an indication of demand for longer-term securities, such as mortgage-related bonds. If it is met with a strong demand from investors, we should see the bond market move higher after results are posted at 1:00 PM ET. However, a lackluster interest from buyers, particularly international investors, may lead to broader bond selling that translates into an upward afternoon revision to mortgage pricing before the end of the day. This process will be repeated again tomorrow when 30-year Bonds are sold.

Tomorrow only has last week’s unemployment figures scheduled and the 30-year Treasury Bond sale as potential influences on mortgage rates. We will get the weekly unemployment update at 8:30 AM ET. It is expected to show 194,000 new claims for unemployment benefits were filed last week, up from the previous week’s 183,000. Rising claims is a sign of employment sector weakness, meaning the higher the number, the better the news it is for mortgage pricing. While this is only a weekly snapshot that usually has a minimal impact on rates, last Friday’s surprisingly strong monthly Employment report should cause this release to draw a little more attention in the markets than it normally does.

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