Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Neutral

FOMC Meeting Minutes

Yesterday afternoon’s release of the minutes from the December 9-10th FOMC meeting didn’t give us any major surprises. They weren’t expected to shed new light on key topics that are relevant to mortgage rates, but may have shined a bit brighter light on what we already knew. The 9-3 vote to make a quarter-point rate cut had the most dissenting votes since 2019, showing a Fed that is quite divided on its future path. There was much discussion about both the need to support a slowing employment sector and concerns about inflation that stubbornly remains well above their preferred annual pace of 2.0%. Comments made question the clarity of what the Fed plans to do next year due to the uncertainty of how their three cuts this year will affect inflation, especially since most of the recent economic data is possibly unreliable because of the gaps during the government shutdown.

Medium

Unknown

Misc Fed

Also worth mentioning on the topic is the upcoming makeup of the FOMC committee. The committee actually has 19 members that attend and discuss monetary policy each meeting. However, only 12 members have voting rights. Some titles have permanent voting status such as the Chairman and the other six Board of Governors, along with the New York Federal Reserve President. The remaining four voting members come from a rotation of other Fed Presidents of the remaining Federal Reserve regional banks. This is newsworthy because the four members rotating in next year are known to have been less supportive of this year’s rate cuts than some of the current members. In other words, the voting member demographics will be changing next year, further clouding what the Fed may do in the future.

Low

Neutral

FOMC Meeting Minutes

In short, bonds had improved a bit during late morning and early afternoon trading yesterday, before the minutes were released. There was little reaction to the 2:00 PM ET release, meaning we are labeling the minutes as neutral for mortgage rates. This is common, particularly with minutes of meetings that included updated economic projections from the Fed.

Medium

Negative

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update was posted this morning instead of the traditional Thursday release because of tomorrow’s holiday. It revealed 199,000 new claims for jobless benefits were filed last week, down from the previous week’s revised 215,000 initial filings and short of the 218,000 that was expected. This signals strength in the employment sector that makes the release bad news for bonds and mortgage rates. Accordingly, we are seeing a negative reaction to the report this morning.

Low

Unknown

Holiday Schedule

We have an early close in the bond market today. Trading will stop at 2:00 PM ET while stocks will trade a full session. All markets will be closed tomorrow for the New Year’s Day holiday and will reopen Friday morning for a full day of trading. Friday will likely be a thin or light day because many market participants will be home for the extended holiday weekend. Thin trading simply means a move in either direction shouldn’t be something to be concerned or happy about since it likely will be corrected when the markets have full staff again Monday.

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Unknown

none

Since there is no relevant data tomorrow and the markets are closed for the day, we will not be updating this report. We would like to take the opportunity to wish you and yours a wonderful and safe New Year holiday!

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

FOMC Meeting Minutes

Misc Fed

FOMC Meeting Minutes

Weekly Unemployment Claims (every Thursday)

Holiday Schedule

none

Float / Lock Recommendation