Up and Down Up and Down, what’s going on?

10 · 03 · 22

Hey, it’s Mike Lynch with Amer First Financial. It’s time for your Monday morning mortgage update for the week of October the third. So first weekend October. Hope you had a great end of September weekend. I had a pack weekend, had a date night with my daughter. Went to a party for an old sheriff, Jim Pope.

Saw a lot of friends that I haven’t seen in a while. Rode my road bike 50 miles, Got from a 50 mile point. Really haven’t done that in a while because it’s been so hot out. But great ride and end of the week going on a dinner cruise with the family. Went out to Whiskeytown, just a shot of the sunset.

Just beautiful out there. Actually put sweaters on and had some blankets. It was so nice and cool out there. All right, so let’s talk about what happened in the market last week and what’s gonna happen this week. Oh my gosh. Talk about volatility in the market over the last week and a half. It’s been crazy.

It’s so hard to keep up with it, but let’s kind of rewind and go back to. Not last Wednesday, but the Wednesday before, and I’m putting my cursor on that date. It’s, it was the 21st of September and this. Just to review a representation of the bond market where mortgage back securities are traded in each one of these bars.

Here is one day of trading the ups of the down. So if you see a green, that means money’s flowing into the bond market and mortgage rates are getting better going down. If you see a red money’s flowing out of the bond market and mortgage rates are going up getting worse. So on the 21st, we know what happened.

The Federal Reserve raised the Fed fund rate three quarters of a percent. Now, that did not impact mortgage rates. It was already baked in that these rates were going to increase and they baked that pricing in that expectation. The Fed was gonna do this a week, two weeks before that, so you can see as I put my cursor on the 21st, there was hardly any movement on that day as far as pricing and rates.

My gosh, look what happened the next day. Over a hundred basis points, sell off on the bond market on that Thursday following that. And that was because the United Kingdom, uk, British Britain said, Hey, we got a big problem. We are gonna increase our Fed fund rate. We got a big recession. They said they’re gonna.

Give tax cuts to the rich and we’re in a world economy and everybody freaked out. Big selloff on the bond market. Mortgage rates went up Friday kind of level off, and then Monday, 154 point basis point selloff in the bond market. Now, to put that in perspective, to see a hundred basis point selloff movement in the bond market and one week is not very common, but to see it in one day is very rare.

Again, this was all had, this all had to do with the uk. Recession numbers that all energy costs are expected to go way up in Europe next year. Just a lot of bad numbers came out of Europe. And then what happened? We had a big recovery. All those losses that we lost on Monday, on Wednesday, we got ’em back and then the market went down again on Thursday and Friday.

And then today it’s back up. It’s back up. You over a hundred. Basis points. I mean, I don’t know how we keep track of this stuff. The rates are up. They’re down. They’re up, they’re down. What I do know is we can’t control these rates. We can’t control what the market’s gonna do. All we can control is how we interpret it and what we tell our buyers and our sellers, cuz they’re getting, every day they turn on the news or get on the internet, they’re seeing up and down and up and down.

It just creates fear and uncertainty. So we have to be that solid voice for our buyers and sellers. But let’s talk about what’s happening in the market this week and how it’s gonna impact rates. So three things. I always give you three things that are gonna impact the market, jobs, world, politics, and some stuff at home.

Some numbers and stats are coming out at home, so, Big jobs week happens every month and a lot of jobs, numbers are coming out. Wages unemployment numbers jobless claims, all that stuff. And last month, the job numbers actually showed the economy was slowing a little bit. However indicators have implied that maybe it’s growing, so there’s been this push and pull.

So we really wanna see where the jobs are this week for the month. Are we seeing fewer jobs? Are we going to start seeing more of a slowing economy? And that’ll impact rates obviously as the economy worsens or, or struggle. That’s better for mortgage rates world politics. So last week, as I said, the United Kingdom and all their financial reports just cause a lot of turmoil and uncertainty in the market, a lot of volatility.

And they said they were gonna hike rates their equivalent of the Fed fund rate, and they said they were gonna give a tax cut to the rich. They. Created so much havoc that then they said, Okay, now we’re gonna buy mortgage bonds or very equivalent of mortgage bonds. And then today said, Okay, we’re not gonna do the the, the cut tax cut to the rich.

I mean, they’re just all over the place. And the reason the market actually improved today is because. UK’s backed off on some of their policies that created so much turmoil. The other thing that happened is gonna happen this week is OPEC is announced to cut oil production. Opec, as we know, is the largest producer of, of oil and that’s gonna drive up energy costs.

If they, if they do do this that means that we’re gonna see increased energy costs going into the winter, increased fuel oil, heating oil, things like that. And then the third thing is at. Big manufacturing numbers coming out, so it’s something called an ism. Manufacturing and Services Report.

Basically, it shows change in production levels. What are businesses ordering? Are they seeing a demand for those raw materials? Are they ordering more stuff? Are they cutting back on what they’re ordering? And so their survey, they, they survey a lot of manufacturing managers at big companies. And what are those managers doing?

Are they ordering more or are they backing off? It’s a key measure of the state of our US economy. Last week, some similar manufacturing numbers that came out were really bad showing our economy as weakening. And so if we see a weakening economy that is actually better for mortgage rates, not good for the economy.

But then what does it do for inflation? So inflation we know is, is bad for rates. Weakened economy is good for rates. So again, there’s just this push and pull. There’s just so much volatility. So what are we doing? We’re starting the day actually locking because the market is up over a hundred basis points.

So we’re seeing if we could ride this wave and maybe. Get some better pricing moving forward. But knowing that these job numbers are starting to come out tomorrow, Wednesday and, and, and Friday we’re on a, a really fast trigger finger to lock rates if we see the market move. So if you have any questions about rates, if clients do, don’t hesitate to gimme a call on my contact information is below.

If you know somebody could benefit for this video, I would appreciate if you forward it to them. Have an awesome day, and we’ll talk to you soon. Bye.