Jason Obradovich, EVP of Capital Markets for New American Funding is back with the latest Mortgage Rundown. If you've been following the market, you may have noticed interest rates have slightly come down. What is going to happen to rates the remainder of the year?
Jason Obradovich, EVP of Capital Markets for New American Funding is back with the latest Mortgage Rundown. With core inflation under 2% and the 10-year Treasury under 3%, the Federal Open Market Committee held steady on interest rates last week.
You probably noticed that there has been very little interest rate volatility recently. In fact the tight range on the 10yr Treasury in June was the smallest it’s been in several years.
Last week was the ever important payroll report which showed 213k jobs added in June versus the 195k that was expected. A very positive sign but the more interesting piece of data was the unemployment rate which surprisingly went up from 3.8% to 4.0%. This was largely a result of a growing labor force, as the labor force participation rate also went up 0.2%.
Last week was another FOMC meeting where they raised the Fed Funds rate to the range of 1.75 to 2.0%, in what was a widely anticipated move. The attention now shifts to the meeting in September with the market pricing in an 81% chance the Fed moves rates for a third time this year. Also, there is now a 50% chance the Fed raises rates a fourth time in December.
If you've been following the market you've likely noticed that the 10yr Treasury is back down below 3%. When it seemed like nothing would stop the 10yr from rising to 3¼%, fears in Europe, mainly Italy caused a rush to safety. Right now the 10yr is trading right around 2.95% in a new range between 2.8 and 3.1%.
The 10yr finally broke through the key 3.03% resistance level and traded all the way up to 3.11%. While it looked like the 10yr was going to continue its climb closer to 3.20%, there has been some international growth concerns that have the 10yr back down to 3.01% currently.
The FOMC meeting came and went last week with little change in the Fed’s stance of 3-4 interest rate increases for 2018. If anything the Fed was slightly more dovish in their tone when they stated it’s possible they could slightly overshoot their inflation target of 2%. The translation of that means that perhaps there will only be three interest rate increases this year.
Today we are going to talk about what’s happening in the capital markets. On March 21st the Federal Reserve met and raised the benchmark rate by 25 basis points. Now what you may not have noticed or expected is that longer term interest rates actually came down since the meeting.
Today we are going to talk about what’s happening in the capital markets. No doubt by now you are aware that the Federal Reserve met last week and raised the benchmark rate 25bps.