Mortgage rates improved today following the Federal Reserve's policy announcement and Fed Chair Powell's press conference. The Fed doesn't set mortgage rates (their policy rate applies to 1-day loans between banks whereas mortgages obviously last a lot longer). But the Fed's monetary policy stance can definitely cause volatility in the broader bond market (which DOES impact mortgages). That was the case today and the impact was positive.
Markets correctly assumed that the Fed would neither hike nor cut its policy rate. That wasn't the source of inspiration. Rather, it was comments from Fed Chair Powell during his press conference. Simply put, the Fed is prepared to keep rates lower for longer in an attempt to keep inflation slightly higher than they ultimately want it to be. Their reasoning is that this is healthier for the economy in the longer-run because inflation had been operating well under the Fed's target for so long after the Financial Crisis.
Mortgage rates moved up modestly today as bond markets weakened in response to trade headlines. This week's key consideration on the trade front is whether or not the planned December 15th tariff increase is delayed, canceled, or confirmed. In general, a delay or cancelation would be bad for rates, but markets are already expecting a delay to some extent. The bigger deal would be waking up Monday morning of next week to find the tariff hike had been implemented. In that case, rates would likely benefit (i.e. move lower!).
Mortgage rates reacted somewhat harshly to an incredibly strong jobs report last Friday. At the time, I noted that such a jobs report would typically have done much more damage to rates, but that the current environment mitigates its impact for a few reasons. First off, labor market strength is taken for granted to some extent, because it's been consistently good for about as long as it's even been consistently good! Just as important is the fact that trade war fears are dominating the market's focus. Depending on the outcome of trade negotiations, market watchers expect a fairly wide spectrum of market outcomes.
Mortgage rates were pushed higher for the 3rd day in a row following an incredibly strong jobs report. For decades, if you were to ask anyone with a reasonable level of experience following rates/bonds to pick one economic report that bonds care about more than all others, the jobs report would basically be the only answer. There isn't even a close second.
In fact, as far as economic data goes, the jobs report is still at the top of the heap. That said, it's typical impact has been lessened for two reasons. First off, ALL economic data is being taken with a grain of salt because traders assume things will change in some unforeseeable way after the US/China trade negotiations run their course. Additionally...
Mortgage rates have seen a fair amount of volatility so far this week, dropping quickly on Tuesday and moving in the opposite direction since then. Between yesterday and today, that big drop from earlier in the week has been completely erased. The result is an average conventional 30yr fixed rate that's right in line with those seen on Monday. Unfortunately, that also means today's rates are in line with their highest levels of the past 3 weeks. You'd have to go back to November 14th to see anything higher.