04 Sep Fed Rate Hike Nears
Today isn’t a great day for either the stock or the bond market, as both are losing value so far this morning. It seems to me that the bond market is simply tired after failing to break above the significant ceilings of resistance that have kept mortgage interest rates from improving. With the Bureau of Labor Statistics (BLS) set to announce their estimate of new job creations for the month of August on Friday, chances are that volatility will be elevated this week.
September is here, so markets are preparing for the Federal Reserve to announce another interest rate hike when they meet next. Although this was expected to be the last rate hike of 2018, many are now expecting one more to be announced in December. With the spread between short and long- term interest rates now only at 20 basis points, the Fed will certainly want to see longer term rates move higher to justify a December rate hike. Otherwise, the yield curve would invest, signaling a recession to follow. So, mortgage rates are likely to move higher in the months to come.
There is very little incentive to float. We will maintain a locking bias.