Mortgage Rates Edge Higher Ahead of Fed Minutes

Saying "ahead of Fed Minutes" in a headline about rates is a fairly cheap trick for a few reasons, or at least it can be.  In today's case, it probably is, but there's never a way to be sure until we see what the Fed has to say.

Actually, it would be more appropriate to say "until we see what the Fed HAD to say."  The Fed Minutes are simply a more detailed account of the meeting that took place 3 weeks ago.  The traders who influence interest rates can occasionally find clues in the minutes that weren't otherwise obvious or previously communicated.  

At present, we have a fairly good idea of where the Fed's collective head is at based on several speeches by Fed members over the past few weeks.  It's possible, but not too likely that tomorrow's meeting minutes will add to the market's understanding in an actionable way. 

One of the reasons the Fed isn't likely to surprise us is that their course of action is heavily dependent on incoming economic data.  If that data comes in as strong as several recent reports, markets will increasingly expect the Fed to leave rates higher for longer.  But if the data takes a turn for the worse like some of the reports in July, speculation will return regarding a mid-2023 rate cut.

The Fed doesn't directly hike or cut mortgage rates, but the factors that would influence its decision making also tend to influence longer-term rates.  With all that in mind, tomorrow morning brings the week's biggest economic report in the form of Retail Sales for the month of July (8:30am ET).  This one report wouldn't be enough to change the decide the narrative, but if it's significantly stronger or weaker than expected, rates could be on the move well before the Fed Minutes come out at 2pm ET.

As for today, the average lender moved up 0.02-0.05%.  That lender is hypothetical, by the way, because mortgage lenders tend to offer rates in 0.125% increments.  When the market doesn't move enough to justify a change that big (like today), lenders raise or lower the upfront costs.