Mortgage Rates Steady in Day Two of the New Year
Mortgage rates were essentially unchanged today as
there was no major sources of inspiration as underlying financial markets are
still getting back in the swing of things after the holiday season. Very quiet today after the volatility
yesterday. No change in MBS markets, nothing significant in treasuries, and the
stock indexes traded back and forth across the unchanged levels from yesterday.
Auto and truck sales were the only economic news today as new-car sales
accelerated through December with auto makers poised to report the highest
annual sales tally ever, shattering the record set in 2000. Full results were
still being compiled Tuesday afternoon, but based on reports by top auto makers
U.S. car sales appeared headed for their best-selling month of the year and
their best December ever.
The next three days bring the weeks most significant
economic data. The biggest source of
risk is Friday's Employment Situation, although tomorrow's data can certainly
get the ball rolling.
No rush to safety yet but it is not far off. In the
meantime, and in the present situation, the long end of the treasury market and
MBS markets remain tame and staying within narrow ranges. Interest rates will
have their day soon but timing is key. Until the key 10yr note falls and holds
below 2.20%, the near term outlook remains bearish.
Do not be too influenced by the issues overseas, but
let it play itself out before one reacts one way or another. For now, when it comes to making a case for
rates to hold their ground or move lower, the burden of proof is on economic
data. Specifically, it would need to
come in much weaker than expected. If
the general tone of the data merely holds steady, that will mean that the
economy and financial markets are at least coping with the Fed's rate
hike. The longer it copes, the more
rates will inch higher. Presently the prudent advice to home buyers - take
present rates, they are still very low.
In summary, all things considered we are off to a
pretty good start to 2016. We sit here
post Fed rate hike with rates we have seen many times over the past year. Despite that relatively good news I feel like
we have a very tenuous hold on this range.
I do not have much of a technical argument it is more just a gut
feeling. With big news on the horizon
this week (Jobs report Friday) I would recommend a defensive stance. Current rates are not nearly as bad as they could
be if Friday’s jobs report is strong.
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