Mortgage rates are holding steady in spite of the stock market rally again this morning. The ECB is saying it is likely to make just small adjustments to its monetary guidance next rather than any major changes. The comments pushed Europe’s stocks higher and supported a strong response in the US markets.
Stocks also getting a boost that AT&T/Time Warner merger will win over the Justice Dept. saying it will block the merger. Earnings from retailers are also adding to the stock market improvement. Trade volumes as I have mentioned the last few days are thin this week, which adds to the price volatility. On Monday we said I stated that I did not expect much movement in markets this week – but it looks like I was wrong looking at the stock indexes in the past few days. Yearend buying is said to be moving markets higher, and of course there is little debate now that Congress will pass a tax cut bill, possibly before the end of the year. President Trump yesterday said he would not oppose keeping the penalty for those who do not purchase health care insurance. The Senate version would eliminate the penalty.
Europe’s bond markets improved today and is following through in the US. Germany’s political situation in turmoil now; Angela Merkel failed to establish a coalition government after her party lost in the September elections. The strongest economy in Europe and the leader politically is now unsettled leading to some safe moves into sovereign debt.
The only data today was October existing home sales expected at 5.44 mil, up from 5.39 mil originally reported. Sales were at 5.48 mil, but September revised from 5.39 mil to 5.37 mil. Sales in October +2.0% from the revised September data; yr./yr. sales -0.9%. Strength shows for both single-family resales, up 2.1% to a 4.870 million rate and up 1.7% for condos to a 610,000 rate. Discounting was limited in October, with the price median down only 0.2% to $247,000 for 5.5% year-on-year appreciation. Supply is yet again a negative for resales, falling 3.2% to 1.800 million homes on the market. On a sales basis, supply is at a very thin 3.9 month following five straight readings at 4.2 months.
Technically, the 10yr is still in its two-month range keeping mortgage rates generally unchanged. It was better early this morning, but is currently at 2.36% as we have seen a strong resistance at 2.32%. Even though the stock market is moving, we have been in a very tight range again with mortgage rates and I do not see any changes this week.