Mortgage Rates & Market Report – Week of April 9, 2018

Mortgage Rates - My Analysis - by Jim Catalano

For Your Information

1, APRIL IS THE BEST – April has been the best month for the S&P 500 over the last 25 years (1193-2017), having gained an average of 1.81 percent (total return), just ahead of October’s 1.80 percent average gain. (source: BTN Research).

2. SINCE TRUMP WAS ELECTED – The S&P 500 has gone 48 trading days since last setting an all-time closing high on January 26, 2018; the longest stretch between record closes since November 21, 2016 or 13 days following Donald Trump’s election win. (Source: BTN Research)

3. JUST 1 PERCENT HIGHER – A 4 percent 30-year fixed rate mortgage has a monthly “principal and interest” payment of $477.42. A 5 percent 30-year fixed rate mortgage has a monthly “principal and interest” payment of $536.82. (Source: BTN Research)

4. YOU MEAN WE’RE GROWING – The 75-year (1943-2017) average growth rate of the US economy is 3.1 percent per year. However, the actual growth rate of the US economy has reached 3.1 percent or greater in only 2 of the last 17 years (2004 and 2005). (Source: Federal Reserve)

5. FOUR GREAT DAYS ON THE COURSE – No golfer has ever completed 4-rounds of golf in the 60s at the Masters Tournament as of the finish of the 2018 tournament this week, a championship event that has been played since 1934. Par at the Augusta National Golf Club is 72. (Source: Golf Digest)


This Week’s Economic News

Stocks are slightly higher, rebounding from the losses on Friday, while mortgage bonds are lower this morning. Today will be quiet with regards to economic news but we will be getting some important inflation data and the Fed Minutes from the March 21st Fed Meeting later this week. In addition to that report, there will be a 10-year and 3-year Auction on Wednesday and Thursday respectively, which can impact the markets, depending on participation and demand.

Following is how the rest of the week looks like like with regards to the pertinent economic news:


  • Producer Price Index (PPI) – the market expects 0.2%
  • Core PPI – the market expects 0.2%
  • Wholesale Inventories – the market expects 1.1% (0.8% prior)


  • MBA Mortgage Applications Index
  • Consumer Price Index (CPI) – the market expects 0.1% (prior 0.2%)
  • Core CPI – the market expects 0.2% (prior 0.2%)
  • Treasury Budget
  • FOMC Meeting Minutes


  • Export Prices excluding agriculture
  • Import Prices excluding oil
  • Initial Jobless Claims – the market expects 230,000 (prior 242,000)
  • Continuing Jobless Claims


  • JOLTS Job Openings Report
  • University of Michigan Consumer Sentiment Index – the market expects 100.6 (prior 101.4)

Mortgage Rate Forecast

The FNMA 30-year 4.0% coupon bond ($102.59, -1.5 bp) traded within a narrower 40.6 basis point range between a weekly intraday low of $102.313 on Tuesday and Friday and a weekly intraday high of $102.719 on Friday before closing the week at $102.594 on Friday.

Mortgage bonds traded in a sideways direction within a narrow range between the 25-day and 50-day moving averages. These two moving averages serve as nearest technical support and resistance levels respectively.

The chart below shows the bond is just below the “overbought” level while showing a new buy signal from a positive stochastic crossover. This suggests there is some room for price improvement with the prospects the bond will stay above its 50-day moving average. If the bond can manage to stay above the 50-day moving average, mortgage interest rates should remain stable at current levels or may even improve slightly.

FNMA 30-Year 4.0% Coupon Bond - Mortgage By Jim



Jim’s Rate Lock Recommendation

LOCK if closing in 7 days

LOCK if closing in 15 days

LOCK if closing in 30 days

FLOAT if closing in 45 days

FLOAT if closing in 60 days

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