Mortgage Rates Quiet

Mortgage rates were basically quiet today even though the data showed them a bit weaker than yesterday’s close going into the weekend.  It was quiet this afternoon, as this morning the stock market opened strong (+190DJIA) then hitting a high of +260 before leaking this afternoon.  The 10yr yield hit 2.18% up 5BPS from yesterday’s close. By this afternoon markets slowed, it is the weekend. Yesterday Janet Yellen indicated she expects the Fed will increase the FF rate this year. Will it be in October or December? The argument for December is that the Fed will have more US and global economic data to look at. The argument for October, the Fed has missed an opportunity to move earlier this year and may not want to lose the opportunity again. Waiting for more data, if the news is not good, will force another delay. Increasingly markets are getting strained with all of the delays while listening to Fed hawks talk the talk but not doing anything. It is nerve-racking for investors and banks - just do it is the growing consensus. Regardless of Yellen’s comments, I as well as most traders still bet no increase this year.

Q2 GDP a little better than expected at the preliminary release last month. Q3 is almost over, the GDP outlook for this quarter is around 2.0% to 2.5%. The U. of Michigan consumer sentiment index decreased in August, but slightly better than forecasted – as it was the weakest since last October.

Next week, the only day there are no Fed officials speaking is Tuesday, every other day they are out in force with Janet Yellen speaking again on Wednesday at the St. Louis Fed. Economic data next week shows August personal income and spending and August pending home sales on Monday, Tuesday September consumer confidence from the Conference Board, Wednesday September ADP jobs, the Chicago Sept purchasing mgrs. index, Thursday Sept ISM manufacturing index, August construction spending, Friday September employment data and August factory orders.

In summary, we are stuck in a confined range on interest rates which can break in either direction.  I believe the current range is a great place to be, and I hope it stays here forever.  Mortgage rates are very attractive and locking in makes sense, albeit we may some improvement next week.  Then again, we could see the opposite as well.  Locking is certainly the safe and intelligent approach for all loans, but more relevant for loans closing within the next couple of weeks.