Mortgage Rates Slightly Better This Morning

After ten straight days of higher movement, mortgage rates are moving better today, even though it is only a slight measure.  This morning at 11:00AM, we see MBSs are up 12BPS and the 10yr is holding at 1.74%. 

Weekly claims were expected to have increased from the previous week, but remained unchanged. The 4-week average continues to decline, from 252.75K the week before to 249.25K. September import prices came in as expected, and export prices came in higher that was projected. China’s economy continues to contract sending global stocks lower today. Chinese data showed a sharp decline in exports, reviving concerns about the health of the world's second-biggest economy.

More FEDSPEAK. Philadelphia Fed President Harker (will vote in 2017) said that he supports one rate hike by the end of 2016. He also said that he does not see an elevated risk of recession. I do not agree, the risk of recession is increasing; not forecasting it but the odds are increasing. The global economic outlook is weakening - no matter who wins the election next month there is a movement increasing that globalization and global trade pacts are going to be re-visited and changed to more of an isolationist US. That is not good for growth or inflation, or interest rates, or job growth. Yes, it will not happen overnight but both candidates are campaigning on the issues of changes in our trade agreements. Not seeing the possibility for a recession is myopic.

This afternoon at 1:00 pm Treasury will auction $12B of 30yr bonds re-opening the issue from August. Yesterday the 3yr and 10yr auctions were just so-so but given the mess in US politics, I guess a so-so auction is not so bad.

The weaker than expected China data is good for mortgage rates and could cause some volatility.  However, I am not expecting any major movement today in mortgage rates given the trend toward higher mortgage rates is still intact.  Should you float or lock.  Right now it depends on your risks tolerance, but I would decide to lock.