Mortgage Rates Slightly Higher This Morning

Mortgage rates are moving slightly higher this morning, even though there is no direct economic data to review and the September employment data out on Friday.  Even with no major (or even minor) economic releases today, we are enjoying a nice pause before the non-stop barrage of jobs data that starts with tomorrow's ADP Private payroll report. 

Richmond Federal Reserve President Jeffrey Lacker (not a voting member this year, but I am loving this guy) said there was a strong case for raising interest rates, arguing that borrowing costs might need to rise significantly to keep inflation under control. He said, "Pre-emptive increases in the federal funds rate are likely to play a critical role in maintaining the stability of inflation." We have Chicago Fed President Charles Evans at 7:00PM tonight.

Since there was not any reports to mull over this morning, many economists were discussing various reports overseas.  The most interesting one came from the IMF (The International Monetary Fund), which the U.S. tax payers are the largest funder, downgraded their global economic growth forecast. They also downgraded the 2016 U.S. growth their original estimate of 2.2% down to only 1.6%. But their forecasts have a reputation for being nonsense. In Italy, they are getting reading to serve up its first ever 50 year long bond auction of 5B euros. It looks like that so far there are over 18B euros chasing it which means it will be oversubscribed by 4 times demonstrating the craving for any kind of yield greater than zero.

There were many that believed that the Brits would drag on for a long time before invoking article 50 of the EU charter to begin the process of exiting.  Yesterday Theresa May dashed that view, as she announced that article 50 would be invoked in March of next year, setting up the two year process of withdrawing from the EU and likely reigniting the concerns about other countries thinking about it.

I really do not like what I am seeing out of the bond market thus far at 10:30AM, as the 10yr has increased to 1.64% and MBSs, even though flat right now, has seen a negative 10BPS already this morning.  My suggestion is that one should lock if closing in the next 15 days (or longer).  IF you like the risks, then float with a great deal of caution.