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By G. Steven Bray
Mortgage rates have moved from riding the range to a long, slow cattle drive. Rates barely budged again last week, and this week is shaping up to be similar – at least until Friday.
Federal Reserve governors are meeting this week in Jackson Hole, WY for a symposium on monetary policy. The symposium includes not just the Fed, but also finance ministers, academics, and financial market participants from around the world. Fri is important in that Fed head Yellen is scheduled to speak. In the past, Fed chairmen have used the speech to provide a less cloudy view of the Fed’s policy intentions. Many market analysts are expecting Yellen to signal whether the Fed will raise short-term rates at its Sep meeting.
Personally, I’m not sure that will happen. Given the kind of leadership she’s demonstrated, I think it’s at least as likely that she’ll hedge – “a rate hike is data dependent” and the like.
If her speech is more hawkish suggesting a Sep rate hike is on the table, I expect mortgage rates will bounce higher. While short-term rates, the ones the Fed controls, don’t directly affect mortgage rates, the knee-jerk market movement will push all rates higher, at least temporarily. I say temporarily because longer term rates like mortgage rates are more interested in the prospects for inflation and economic growth. The direction of both of those still is in doubt.
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