September 8th, 2017 10:45 AM by Mel Samick
An increase in tensions with North Korea was positive for mortgage rates early in the week. Political headlines then caused some volatility later in the week, but the net impact was small. At Thursday's meeting, the European Central Bank (ECB) essentially postponed a discussion about tapering its bond buying program until its next meeting, so there was little reaction. The net effect was that mortgage rates reached the best levels of the year.
Geopolitical events were the primary influence on mortgage rates over the past week. On Sunday, North Korea conducted its most powerful missile test yet. Once again, the reaction from investors to the increase in tensions was to buy relatively safer assets such as U.S. mortgage-backed securities (MBS). The added demand for MBS caused mortgage rates to decline. Later in the week, mortgage rates rose and then fell based on shifting prospects for a plan to extend the debt ceiling.Increases in uncertainty about the debt ceiling have been good for mortgage rates. Conversely, when signs of progress on a plan have appeared, it has been negative for rates.
The effects of Hurricane Harvey were evident in the latest report on Jobless Claims which is released every Thursday. After holding very steady at levels near 240,000 for the last couple of months, claims jumped to 298,000 this week. This was the highest level since April 2015. It also was the largest weekly increase since 2012.
Looking ahead, the JOLTS report, which measures job openings and labor turnover rates, will be released on Tuesday. The Consumer Price Index (CPI) will come out on Thursday. CPI is a widely followed monthly inflation report that looks at the price change for goods and services which are purchased by consumers. Retail Sales will be released on Friday. Consumer spending accounts for about 70% of economic activity in the U.S., and the retail sales data is a key indicator. In addition, there will be Treasury auctions on Monday, Tuesday, and Wednesday. Headlines about the debt ceiling also could cause volatility in mortgage rates again.
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