If you can't see the newsletter, or would like to view it online, use this link If you have received this newsletter indirectly and would like to be added to our weekly distribution list, use this link
Provided to you Exclusively By Bob Bednarz  
For the week of May 12, 2025 | Vol. 23, Issue 19
Bob Bednarz
Bob Bednarz
Loan Advisor
NMLS ID 259771
Guarantee Mortgage is a Division of American Pacific Mortgage Corporation
NMLS #1850
Cell: 415-871-5756
Direct: 415-891-3405
Efax: 415-329-1951
E-Mail: bbednarz@guaranteemortgage.com
Website: www.guaranteemortgage.com
Guarantee Mortgage is a Division of American Pacific Mortgage Corporation <br>NMLS #1850
 

A Look Into the Markets

Interest rates remained steady despite the Fed holding off on cutting rates. Let's recap last week's key developments and preview what's on the horizon.

"Don't think me unkind, words are hard to find" De Do Do Do De Da Da Da, The Police

The Federal Open Market Committee May 7th Statement

"Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4.25% to 4.50%. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."

Here's what it means in simple terms: The economy is growing steadily, though changes in exports have caused some ups and downs. Unemployment is low and stable, and the job market is strong. However, inflation is still a bit high.

The Federal Reserve (the "Committee") wants to keep unemployment low and inflation at 2% in the long term. Right now, there's more uncertainty about the economy, and there's a higher chance of both unemployment and inflation going up.

To support these goals, the Fed decided to keep the federal funds rate (a key interest rate) at 4.25% to 4.50%. They'll keep watching new data and risks to decide if and when to lower rates.

China and US Set to Talk

On the tariff front, a first step has been taken between the US and China as it was announced that the two countries will meet in Switzerland this Saturday.

A Chinese Ministry Spokesperson had this to say, "On the basis of fully considering global expectations, China's interests, and the appeals of US industry and consumers, China has decided to re-engage the US." This while US Treasury Secretary Scott Bessent offered "My sense is this will be about de-escalation, we've got to de-escalate before we can move forward."

The story between the US and China is the biggest uncertain event for the economy and a major reason why the Fed decided to hold off on cutting, as so much uncertainty exists as it relates to unemployment and inflation. Hopefully, this first step will lead to more clarity and certainty for the economy and the Fed.

Solid Appetite for US Debt

Last Tuesday, the Treasury Department sold $42B in 10-year Notes, and the overall buying appetite was strong, highlighting the continued demand both here and abroad to own US debt. The solid auction also allowed mortgage rates to hold near the best levels of the week.

30-Year Mortgage Rates

The 30-year fixed rate mortgage averaged 6.76% as of May 8, 2025, unchanged from the previous week.

4.20%

The 10-year Treasury Note, a key driver of mortgage rates, has been making a series of lower lows and lower highs since touching 4.60% a few weeks ago. The 4.20% level continues to serve as a floor of yield support limiting the improvement in rates.

Bottom Line: After last month's wild volatility, May has started a bit calmer. For now, it appears the Fed is not likely to cut rates in June, unless we see some more low inflation prints and/or certainty as it relates to the tariff negotiations.

Looking Ahead

Next week it is all about inflation. The Consumer Price Index (CPI) will be released. Current rates of inflation are the lowest in nearly four years yet, prices are still climbing at paces above the Fed's 2% target. If this number comes in high, bonds and rates might suffer; the opposite is true.


Economic Calendar

For homebuyers and refinancers, mortgage rates are critical and closely tied to mortgage bond prices. The chart below tracks the Fannie Mae 30-year 6.0% coupon. The rule is straightforward: rising bond prices lead to lower mortgage rates, while falling prices drive rates higher. The right side of the chart shows prices stuck beneath key resistance, limiting higher prices/lower rates.

Chart: Fannie Mae Mortgage Bond (Friday May 9, 2025)

Economic Calendar for the Week of May 12 - 16


The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: bbednarz@guaranteemortgage.com

If you prefer to send your removal request by mail the address is:

Bob Bednarz
Guarantee Mortgage
300 Tamal Plaza, Suite 250
Corte Madera, CA 94925

Vantage Production, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Vantage Production, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Equal Housing Lender