Fed Decision to Guide Mortgage Rates, June 23, 2010
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- David Coster - MortgageLoan.com
Mortgage Rate Trend Direction Neutral/down
Economic Reports/Rate Impact New Home Sales, 10 AM, Moderate Rate Impact
Fed Interest Rate Decision, 2:15 PM, High Rate Impact
Key News European Debt Issues, Chinese Currency Valuation
Summary
Market activity may be cautious in the US today as traders await the Fed’s decision on whether to change key interest rates. Markets in Asia and Europe dropped in trading today as continuing concerns over European Debt and China’s currency revaluation emerged. With the Fed’s decision not coming until 2:15 PM ET, mortgage pricing will likely begin the day neutral relative to yesterday’s close.
Impact of Economic Reports
New home sales figures for the month of May will be released by the National Association of Realtors. Expectations are that sales dropped from their April levels. Similar to yesterday, a surprise in these numbers could result in a change in mortgage pricing.
Impact of international or political events
Negative comments by billionaire investor George Soros about the impact of German budget cuts on the viability of the euro currency have caused new concerns throughout Europe. Mr. Soros based his concerns on a belief that budget cuts would result in deflation (reduction in overall prices) that would lower the value of the euro. Similar budget cuts are taking place in the UK, France, Spain, Portugal and Greece to respond to high level’s of government debt. Weakness in Europe can be positive for mortgage pricing in the US.
China’s rhetoric about allowing its currency (the Yuan) to fluctuate in value against the US dollar appears to many analysts to be simply talk designed to improve their standing at this weekend’s G20 meeting of leading economies in Toronto. After making its currency statement last weekend, the Chinese Central Bank has pursued a plan to purchase US dollars which has the effect of keeping the two countries currencies closely valued. Clarity, in China’s intentions, which may not come until the G20 meetings, will likely move mortgage pricing.
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National Rates
| Loan Type | Today | +/- |
|---|---|---|
| 30 yr fixed | 3.69 |
|
| 15 yr fixed | 3.00 |
|
| 5/1 ARM | 2.69 |
|
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