Mortgage rates had little movement over the past week. Central bankers provided no fresh guidance, and the U.S. economic data contained no significant surprises. Mortgage rates ended the week a little higher.
The only recent economic data that seemed to cause any movement in mortgage rates came from a report which rarely gets much attention in the U.S. Monday’s release of the flash purchasing managers index (PMI) from Markit showed an increase to 53.2, well above the consensus of 51.5. The index is based on a survey of manufacturers, and readings above 50 indicate an expansion in the sector. Other countries usually look to the Markit PMI for an indication of the manufacturing sector’s performance. In the U.S., however, investors generally pay more attention to the index from the Institute of Supply Management (ISM), so Monday’s reaction was a bit of a surprise. The ISM manufacturing index will be released on November 1.
The next U.S. Fed meeting will take place on November 2. In contrast to other recent Fed meetings, investors widely expect that little new information will emerge from this upcoming meeting. Fed officials have expressed reluctance to raise the federal funds rate ahead of the presidential election. The main question is whether the Fed will provide additional guidance at this meeting about the likelihood of a rate hike at the meeting on December 14. According to the futures market, investors think that there is about a 75% chance that the Fed will raise rates in December. Read more at www.GrahamPeterson.com
