Rates Are Heading South

Rates Are Heading South!  Should I grab the rate and lock, or should I float?

A lot of economic data today was released early this morning with each report being better than expected.  April CPI was right on – Weekly Jobless Claims fell below the 300K mark – and the NY Empire State manufacturing index came in a lot better than anticipated.  Even though there was a knee jerk reaction with the Mortgage Backed Securities (MBS) and the 10yr Treasury going to 2.55%, at the time of this writing at 10:00AM CST, we see the 10yr at 2.48%.

The reason is the other reports that filtered out - April Industrial Production came in below expectations - the May Philly Report did come in better than expected (even though this was expected) – and the NAHB came in at its lowest levels since last May.

With the 10yr hitting the lows from last October when it reached 2.47%, we have not seen it close below 2.50% since last July.  The entire move in interest rates lower has caught investors flat-footed.  The overwhelming consensus was for rates to increase even though the market itself was pointing to lower rates.  Some started with the issues in Russia and the Ukraine, but now is the fear of a weakening economy.  There are now concerns about the lofty levels of the US Stock markets.  I am now wondering what we had talked about several weeks ago may be coming in the near future – a correction in the stock market!

I would recommend to float with extreme caution, but if you are closing in the short term, you might as well be happy and take the rate now.