Market Matters, November 25, 2017 Edition

By
Mortgage and Lending with Brand Lending Company NMLS# 1326698

Mortgage applications for the previous week were mostly flat, up.1% on some stronger purchase activity (+5.3%) and weaker refi activity (-4.8%).

Existing Home Sales rose 2% in October, a nice rebound from the hurricane affected .7% rise in September. Sales in Houston and Jacksonville recovered nicely, yet South Florida continues to show weak results. Existing Home Sales also showed gains in the Northeast, Midwest, and the West. 

Durable Goods Orders in October fell by 1.2%, while orders ex-transportation actually rose .4%. Capital goods orders nondefense ex-aircraft saw a drop of  .5%. The headline is weaker than markets had expected, however it is dominated by the always volatile aircraft orders. Boeing, after seeing over 30% increase in September orders, saw a decline of 18.6% last month. In the data for October, the details excluding aircraft is fairly mixed, but overall consistent with the current manufacturing environment. The orders composition continued to reflect more strength in most categories outside aircraft and defense orders.

The FOMC is scheduled to release its Minutes from their November meeting on Wednesday. To recap, the Committee voted unanimously to leave their target rate range unchanged, however, they upgraded the assessment of economic conditions stating that ‘economic activity has been rising at a solid rate. On the inflation front, the discussion within the Minutes should be what markets are more focused on as their measures have recently stayed flat (PCE 1.3%) for a couple of months now. Regarding the implied rate change next month, the fed funds is pricing in about a 94% chance of a December hike, however, the level of confidence in their projected rate path should also be more of what the markets focus on in the release.

Looking at the market, the 10yr is posting slightly lower yields, currently around the middle of our ~2.31-2.42% trading range. The sideways grind in rates is what we’ve become accustomed to over the past few weeks, and for the time being, we remain range bound. Despite some more bond-bearish info of late, the fact that yields have been able to hold steady and build some higher trading volumes is a good sign for us. As of now, we don’t necessarily think a break of the range is here just yet, but we do expect to test the extremes of the range again, possibly in the week ahead. Volume is bound to be on the lighter side with trade desks half-staffed. That said, your best bet is to take advantage of the price action we’ve seen lately and get some loans locked in.

 

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 Oscar Busch
 Mortgage Loan Originator
 
 NMLS: 1326698
 (703) 424-2146 Office
 (703) 470-7538 Mobile
 (877) 763-5686 Fax
 11130 Fairfax Blvd
 Suite 303
 Fairfax, VA 22030
 
 Email Me  oscar.busch@primelending.com
 Website  lo.primelending.com/oscar.busch
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PrimeLending NMLS: 13649. Equal Housing Lender.

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