Summer of Change?
Last week’s meeting of the Federal Reserve Board’s Open Market Committee was not so much about what they would do when they met. It was more about what they would say about the future. The two topics of interest were future interest rate hikes and selling off their stockpile of assets, which is comprised of bonds and home loans. Obviously, both of these topics might affect the direction of rates and are subject to change based upon the direction of the economy and any intervening factors.
The Fed does not meet again until September and that leaves more time to access the state of the economy. This week we have the first major data release since the meeting. The July jobs numbers are all important with regard to their decision-making process and we will also have the August jobs numbers released before they meet again. The preliminary growth estimate for the second quarter was released last Friday and these numbers will be revised at the end of this month.
Of course, we can’t predict what intervening factors might arise. In the past, we have had major world-wide economic, political and weather events which have affected the markets. And we certainly are not trying to predict the occurrence of a particular event. Whatever the Fed said, we are just pointing out that their statements are subject to change as the summer comes to a close in the next several weeks.
The Weekly Market Update
Rates moved lower for the second week in a row. For the week ending July 27, Freddie Mac announced that 30-year fixed rates fell to 3.92% from 3.96% the week before. The average for 15-year loans decreased to 3.20%, and the average for five-year adjustables moved down to 3.21%. A year ago, 30-year fixed rates averaged 3.48%.
Attributed to Sean Becketti, chief economist, Freddie Mac — “The 10-year Treasury yield rose 5 basis points this week, while the rate on 30-year fixed loans dropped 4 basis points to 3.92%. Home loan rates in next week’s survey would depend on how the market reacts to the Fed’s balance sheet unwinding announcement.”
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.