Mortgage rates moved lower at a good clip yesterday and have held those gains in overnight trading

This would make sense since the underlying bond market (which dictates rates) did a good job of maintaining gains made on Tuesday afternoon, following a surprisingly strong 2-tier Durable Goods report. In other words, while there were some potential motivation to move higher, the bond market was expecting far worse and ended up pleasantly surprised.

To be clear, there's always a chance that we've now seen the best levels of the week until something else comes along to motivate bonds further. That's nearly always the case when it comes to a "conventional" trading week which means nothing big enough to sway the markets once they've already moved in one direction. It's not out of the question, but it's certainly not a given either.

In any event, today brings much more important economic data than what we saw yesterday. Specifically, this morning brings not only the all-important Unemployment Claims data but also a measure of inflation. Inflation is always a big deal for bonds and mortgage rates, but it's especially important this week because of the Fed announcement yesterday. The Fed made multiple attempts to downplay the risk of inflation in its statement, but investors aren't sure they believe it.

This morning's claims data gives us a look at the labor market after the Labor Day holiday weekend. Last week's number was 716k--the lowest since the start of the pandemic. Any number significantly below that would be a good sign that the labor market is continuing to recover albeit at a slower pace than expected.

Finally, the Consumer Price Index (CPI) data at 8:30am is obviously key for inflation. It measures the change in the cost of a fixed basket of goods and services over time, and it will draw attention as investors look for any indication that the Fed's rhetoric of low inflation is slipping.

At this juncture, the average lender is still close to recent lows in terms of rate offerings. This means there's still an opportunity to lock if you're comfortable with the rate that's being quoted. It also means that we're likely to see bond markets being driven by the data and news stories more than anything else until something else comes along. That something else could be next week's FOMC Announcement, but we'll have to wait and see. Until then, enjoy the potential for slightly lower rates today!

Mortgage rates continued to improve on Wednesday, following the positive outcome from the two-tier durable goods report on Tuesday. With this in mind, the bond market has been able to maintain gains, suggesting that mortgage rates may remain near current levels until another event takes place to move them further.

Today is particularly important as two economic events are taking place; unemployment claims and the consumer price index (CPI). The former will give insight into the state of the labor market post-Labor Day while the CPI will highlight the status of inflation which has been a major concern of investors for some time.

Unemployment claims numbers for the week of September 20th are expected to remain relatively low compared to earlier in the year, as last week the total was 716,000- the lowest figure since the pandemic began. The CPI is also likely to be closely watched, as it measures the changes in the cost of goods and services over time, and serves as a reference point for investors looking for signals regarding the future of inflation.

Overall, mortgage rates remain close to recent lows and lenders are offering the same opportunities to lock in those rates. Going forward, markets are expected to derive their movements from data more than anything else until the FOMC meeting next week, giving mortgage seekers an opportunity to potentially secure lower rates in the meantime.

In summary, mortgage rates improved again on Wednesday, supported by a surprisingly positive durable goods report on Tuesday. On Wednesday, investors will be keeping a close eye on unemployment claims and the consumer price index data, both of which may impact the movement of mortgage rates in the short-term. The average lender remains close to recent lows in terms of rate offerings, making this a good time for potential borrowers to lock in a rate. Unless something drastic occurs, these conditions are expected to remain steady until next week’s FOMC meeting.

This article was contributed on Nov 15, 2023