The race over the next Fed chair is continuing to make waves in the markets. Yesterday, concern that Stanford Professor John Taylor was a front-runner pushed investors into bonds, causing rates to fall. Today we’re seeing a reversal of that trend as those fears are tempering. Read on for more details.
Market Outlook 10.16.17 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Fed in focus
The Federal Reserve is in full focus this morning as investors continue to their speculation on the next Fed Chair. It’s up to President Trump to nominate someone and at this point, it’s widely believed that even he doesn’t know who he will choose yet.
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There’s no concrete timeline for when Trump will make a decision, either. The earliest it would likely happen would be next week, but it could also take him until early November to make an announcement.
Trump has been meeting with potential candidates over the past couple of weeks, and is scheduled to sit down with current Fed Chair Janet Yellen (whose term ends in February) tomorrow. While the two have definitely had their differences (Trump accusing Yellen of keeping rates low during the president election campaign) it’s not entirely out of the question that he renominates her.
There’s no doubt that that decision would ruffle some political feathers, as his conservative base would much rather a new, fresh face (and someone who wasn’t appointed by a Democrat), but Trump has stated that he’s a low interest rate guy and it’s clear from her actions that Yellen shares a similar sentiment.
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On the other side of the table is Stanford economist John Taylor (famous for his Taylor Rule) who would certainly be in favor of a much tighter monetary plan. News that Trump was warming up to Taylor spooked the markets yesterday, but that frenzy has scaled back today as investors take a more steadied approach.
The takeaway here is that who President Trump nominates will have a clear effect on the markets, which in turn will impact mortgage rates. Over the next few weeks, as financial market participants grapple with various front-runners for the job, it’s likely that we will see more mini-events in the market like yesterday.
What does this mean for me?
Rates still at low levels for 2017
Mortgage rates have remained mostly flat this week, keeping them near some of the lowest levels of the year. If you’ve been considering a purchase or refinance, right now is a great time to take action. It does seem as though rates are going to rise over the long-term, so we’re recommending that borrowers act sooner rather than later.
Click here to head to our Mortgage Builder and figure out how much you could save.
Today’s economic data:
Fedspeak
- New York Fed President William Dudley at 8:00am
- Dallas Fed President Robert Kaplan at 8:00am
Housing Starts
Housing Starts for September came in at 1.127 M. Permits came in at 1.215 M.
EIA Petroleum Status Report
For the week of 10/13/17:
- Crude oil: -5.7 M barrels
- Gasoline: 0.9 M barrels
- Distillates: 0.5 M barrels
Beige Book
The Federal Reserve’s Beige Book will be released at 2:00pm. It contains various anecdotes about how the economy is performing in the different Fed regions. Investors will note what is happening in it but it’s by no means a significant market moving report.
Notable events this week:
Monday:
- Empire State Mfg Survey
- Fedspeak
Tuesday:
- Import and Export Prices
- Industrial Production
- Housing Market Index
Wednesday:
- Fedspeak
- Housing Starts
- EIA Petroleum Status Report
- Beige Book
Thursday:
- Jobless Claims
- Philly Fed Business Outlook Survey
Friday:
- Existing Home Sales
- Fedspeak
from Total Mortgage Blog http://ift.tt/2ystBLC
via Naza Finance Blog
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