Mortgage Rates Showing Little Movement

Mortgage rates are moving sideways again today.  Both the 10yr and MBSs prices have had little movement as they are in a tight narrow trading range, but with what direction it has gone has not been favorable.  Volatility is not too high now, as I have been saying, I do not look for the small range to be exceeded in either direction until at the earliest next Wednesday when the FOMC policy statement is released. Even then, with the elections a week later investors may keep their hands in their pockets; no selling or buying.

This morning’s news saw weekly Mortgage Applications drop lead by a big drop in Purchase Applications.  New Home Sales September reading as not as high as anticipated, and the revisions in August went down as what was previously reported.

In manufacturing, the Preliminary Wholesale Inventory data for September showed a 0.2% MOM gain vs a -0.2% pull back in August. YOY it was flat. Markit Services PMI for October (Prelim) were much stronger than expected.

We still have Treasury Auctions this week as we followed yesterday’s weak 2yr note with today's 5yr note at Noon.  Currently the Fed cannot speak as they are in their "black out" period leading up to the November fed meeting.

The price of crude is lower again today. Two weeks ago, OPEC talked about cuts in production, at the time we noted it would not likely happen. Now producers are talking about wanting out of any cuts - Iran, Iraq want exemptions. As I have stated before, every producer wants and needs the revenue. OPEC can talk the talk but cannot walk the walk.

Like the last few days, I am not looking today for a big change in mortgage rates.  Short of oil making a significant move, mortgage rates should trend very slightly worse.  There is no change in the technical outlook - still leaning to the bearish side but rates and prices have not changed much for over two weeks. There is not any reason we can see that interest rates will change much through the rest of the week. FOMC next week and on Friday this week the first report on Q3 GDP, expected to have grown to 2.5%.