With all of the excitement yesterday from the Fed, Jobless Claims Thursday is taking a big back seat. It shouldn't come as a surprise that we have some mixed data - nothing to big one way or the other, though. Initial Jobless claims came in a tad better than expected at 271K vs. 275K expected. Continuing Claims came in worse at 2,238K vs. expected of 2,220K. In keeping with many of the other poor manufacturing data releases, the Philly Fed Manufacturing Survey came in at -5.9 vs. estimates of +2.0 and previous of 1.9. Finally, Leading Economic Indicators came in at .4 which was better than estimates of .1 but worse than the previous reading of .6.
Yesterday I wrote about how we could see some buying in the mortgage bond market if the Fed came out with a weaker rate increase than expected. While they raised the rate by the expected .25%, their comments were quite dovish and it did lead to some initial buying. The FNMA benchmark bond was up as much as 20 basis points before retreating and closing down 9 basis points. With more mixed data this morning, traders are in a good mood and doing some buying with the bond up 26 basis points.
After a 9-1 vote in October against raising the Fed Fund rate / target range, yesterday the vote was unanimous to raise it. "Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent (italics added)." The range was 0 - .25% and it's now .25% - .5%. The expectation is for 1.375% by next December which is an average increase of less than .125% per FOMC meeting which is still pretty accommodative. "The stance of the monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2% inflation."
There you have it. It's not the end of the world and with a stronger economy and higher employment, more people should be able to qualify for mortgages to buy homes which is a great thing for Realtors and mortgage lenders like me. Check out my Free Mortgage Report for a better understanding of the mortgage process, mortgage programs, mortgage insurance and strategies for your financial future. Feel free to share it with friends, family and clients.
Tomorrow is a slow day and with the Fed's actions behind us, I am recommending to float (with caution). If you have a loan closing in the next 15 days, I would lock and take advantage of this morning's gains but if your loan isn't closing for 15-30 days, I'd float and see if we get a bit of follow through tomorrow and Monday. Trading will be light next week because of the holidays so it won't take as much to move the market one way or the other so it will be extra important to keep a close eye on the market if you are floating. As always, I'm here to help - 801-853-8721 or 702-812-1214. Make it a great day.