With few new political headlines or major surprises in the economic data, it was a quiet week. Wednesday’s release of the Fed minutes was the biggest market mover, but those gains were offset by small losses on other days. The end result was that mortgage rates ended the week with little change.
Wednesday’s release of the detailed minutes from the Fed meeting on May 3rd said that Fed officials expect to raise the federal funds rate again “soon.” To explain the need for the rate hike, they said that they viewed the slow economic growth during the first quarter as “transitory.” Fed officials also expect inflation to gradually rise. This information was in line with the Fed statement on May 3rd and recent comments from Fed officials.
The minutes did contain new information about the Fed’s plan to reduce the $4.5 trillion of mortgage-backed securities (MBS) and Treasuries on its balance sheet. The plan calls for a gradual reduction by no longer reinvesting all of the principal payments received. The amount that will not be reinvested will be announced in advance and will increase over time on a fixed schedule. Although many questions remain unknown, investors were pleased to see a plan which is intended to minimize disruptions to the market, and mortgage rates improved slightly after the minutes were released.
Looking ahead, the important monthly Employment report will be released on Friday. As usual, this data on the number of jobs, the unemployment rate, and wage inflation will be the most highly anticipated economic data of the month (and CAN be a rate mover).
Please reach out with any questions in regards to this, and let us know if there is anything we can do for you and your valued clients.
Thank you for your continued support, have a productive week.
SVP, Regional Manager
THE CRAWFORD TEAM
V.I.P. Mortgage, Inc.