Tag: interest rates

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By G. Steven Bray

After weeks of fairly stable mortgage rates, it was a shock that rates rose last week. This is not a sky is falling moment. Rates are off their recent lows about 1/8%.

The Federal Reserve meets this week, and market analysts attribute the rise to concern the Fed is going to change the wording of its post-meeting statement in a way that could indicate interest rate hikes are going to happen sooner than previously expected. Notice there are a lot of if’s and could’s in that concern, but the financial media has repeated the concern so often that it’s almost certain the Fed statement on Wed will affect rates.

The risk of a big jump in rates is pretty low as other factors still are creating uncertainty for financial markets. And uncertainty tends to push rates down. On the other hand, if the Fed dispels the concern, it’s possible rates could return to their previous lows in the next couple weeks.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Mortgage rates remain stuck, which is a good thing when rates are this low. However, with last Fri’s sorry US jobs report, some are wondering why rates didn’t move lower. The simplest reason seems to be that markets didn’t believe the report. The report showed almost 100k fewer jobs created in Aug than was expected while most other economic indicators (except housing) are showing moderate growth.

Another reason may be Europe. We’ve talked at length the last few weeks how ultra-low European bond rates are pressuring US rates. The European Central Bank did little last week to alter the rate picture. It hinted at a quantitative easing program to lift European economies but provided little detail. Then, it seemed to backtrack. The result was some rate market volatility but ultimately little change.

This week’s most significant economic report is retail sales on Fri. Until then (and quite possibly beyond), I look for rates to react to any global headlines (such as from Ukraine or Syria) but otherwise remain stuck.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

US interest rates have been under pressure for the last couple months from events overseas, both the various armed conflicts and crummy economic data coming out of Europe. As we discussed before, it’s hard for US rates to rise when European rates are setting record lows.

Two events this week could add some volatility and break rates out of their summer slumber. Thursday brings the European Central Bank meeting. The ECB has been hinting that it will enact a quantitative easing program ala the Federal Reserve to combat weak economic growth and potential deflation. Recent analysis suggests a program announcement won’t happen this week, but I suspect markets will be disappointed if the ECB doesn’t flesh out the idea a little further, and that disappointment could bump rates up a little.

Friday brings the US jobs report, typically the most important economic report each month. I think a 25% miss either way (stronger or weaker than expected) could break markets fixation with overseas events, at least temporarily. However, in the case of a stronger report, I think the European wet blanket will temper any reaction. But such domestic strength could push rates back up to the top of their current range, which is about 1/8% higher than today’s rate.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The storyline hasn’t changed. European economies are struggling, and markets are anticipating new measures from the European Central Bank to try to stem the tide. As a result, European interest rates are flirting with all-time lows. Add to that the various global conflicts, and you have an effective block against rising US interest rates.

But of course, I’m assuming rates have a reason to rise. And they probably do. Recent Federal Reserve communications have hinted that it may raise the federal funds rate sooner than expected, and the US economy is showing some life. Both factors would tend to push rates up.

We’ll get a lot more economic data this week with the highlight being updated 2nd quarter GDP. While this is backward looking data, it could be relevant if it differs much from the initial report of 4% growth. But I still think any bond market reaction would be muted by the global factors cited earlier. On the other hand, next week is a jobs report week. That has a better chance of setting the direction of rates for the fall.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.