Mortgage rates fell this week, touching 20-year highs before retreating considerably in recent days.
The sharp reversal over the past few trading sessions – a rarity these days – suggests that investors may finally be expecting some moderation in the Fed’s pace of monetary policy tightening and some softening in key economic data releases – the two factors that have combined to push rates firmly higher this year. More generally, it appears that financial markets are now in somewhat of a holding pattern until more significant data emerge. But investors won’t have to wait long for these hypotheses to be tested. Next week’s Federal Reserve announcement is sure to move markets, as will the October jobs report that will arrive two days later.
Any indications that the Fed plans to maintain, or even accelerate its previously-stated plans for tightening monetary policy would almost certainly send mortgage rates higher once again.