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Weekly Market Update
Mortgage rates rose this week as the White House and Congress continued to negotiate a deal on the debt ceiling. There are reports that we are getting closer to a deal is getting closer that will raise the debt limit for two years. Assuming a deal gets done, the next focus of the market will be how much new treasury bonds the treasury will issue to increase its cash balance, and the next move for the Fed. It is assumed that the increase in treasury bonds will push government bond yields higher, which would push mortgage rates higher as well. The real question is what the Fed’s next move is as the economy is still stronger than expected. We are seeing Fed Funds futures pricing in nearly a rate hike by July, with the probability that they hike rates in June over 50%. The Fed is data dependent, and we will see May’s jobs numbers the first week of June, so, that should help give better insight to the Fed’s next move.
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U.S. 10-year Treasury closed at 3.81% on Thursday afternoon
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New Home Sales came in higher than analyst’s expectations (+4.1% m/m vs expectations of -2.6% m/m)
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Pending Home Sales came in lower than analyst’s expectations (0.0% m/m vs expectations of 1.0% m/m)
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Initial Jobless Claims came in lower than analyst’s expectations (229k claims vs expectations of 245k claims)
