Mortgage Rates at Low Point for the Month

Mortgage rates dropped again today, continuing a recent trend of improvement and bringing us to the best levels seen since March 1st.  The timing is dramatic, with today being the last day of the month/quarter and also the day before the important Jobs Report.

For two weeks we talked about the 10yr note resisting what most deemed a key technical resistance at 1.85% and said when it did finally move through it all, the technicals would turn from neutral to solidly bullish. The breakthrough came last Tuesday when Janet Yellen told the world she was in no hurry to increase the FF rate as had been forced fed to markets by a number of Fed officials’ hawkish statements. Tuesday the 10yr dropped to 1.82%, yesterday it held at 1.83%, today even ahead of the employment report tomorrow the 10yr continued to decline to 1.78% and all of it as usual taking the MBS markets along with.

It is unusual for interest rates to have a major move ahead of the monthly employment data, especially to improve much. This morning the March regional Chicago purchasing managers index was much better than expected when it was released, generally, a report that would add some pressure to the rate market prices. Weekly jobless claims increased, but the number is still in the tight range we have talked about for over a year.

And yet another regional Fed president out there - even after Yellen made it clear she saw no rate increases coming soon this year, if at all. Here comes Dennis Lockhart riding hard out of the gate, saying the Fed has three rate increases this year as a good possibility.

Besides employment tomorrow, we have the ISM March manufacturing index, and the final U. of Michigan consumer sentiment index. Also tomorrow March auto sales will hit through the day. It is going to be a big day tomorrow for data.

In summary, mortgage markets typically get defensive (lose ground) on Non-Farm Payrolls' week, but that was not the case today.  Bonds and rate sheets have enjoyed nice gains the last few days, so if you have been floating you can lock today and be a winner.  This will be the first NFP I have not recommending locking, but outside of a remarkably strong report, the trend is still our friend.  Floating into NFP day is always risky, but if you can tolerate the risk and afford to be wrong, it could pay off big.