Weekly Mortgage Rate Update- 10-31-2023
Rates ended last week slightly better than the start, as geopolitical tensions offset positive economic news.
GDP 3rd quarter posted its strongest reading since 4th quarter 2021 at a surprise to the upside of 4.9%. The recession is nowhere in sight based on the recent data. Yes, consumers are still spending, but it appears that the spending is coming from credit cards and reduced savings. Indicated by personal savings rates decreasing for all but the top 20%. Credit card balances rising to all time highs, and income not keeping pace with spending. No wonder the consumer sentiment reports are coming in weak. Usually, a strong economic reading would have moved rates higher, but perhaps the underlying feeling is that things are not as strong as they appear and we have looming fears on the geopolitical front. Markets are forward looking and 3rd quarter GDP is in the past.
This week is packed with market moving news. Most importantly tomorrow when the FOMC meeting ends and Powell holds a press conference after. The question everyone wants answered: Is the Fed done raising rates? Like I mentioned in last weeks update, the market has been doing a lot of the work for the Fed, they may not have to raise the fed fund rate considering the bond market has been moving rates up faster than Fed policy in recent months.
We also have a lot of employment data this week which is always key. If you are on the lookout for lower rates, unemployment must rise.
Of major note and possible wild card, the treasury will announce its debt issuance schedule after announcing yesterday that for fiscal year 2024 they are projected to need 2.5 trillion to fund the deficit in spending. Doesn’t seem to be going back to pre-pandemic levels, but this is better than some had expected, so that’s something bu with the war escalations, this could easily go higher depending on the US involvement. Inflation may ease, the Fed may pause, but the deficit funding will keep rates higher than otherwise might expected.
We will probably have a lot to talk about after all this plays out for the remainder of the week.
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