Mortgage Rates Heading Higher - 10yr at 2.47%

Mortgage rates are moving higher again today.  Today, as was the case yesterday, we are seeing more selling in the bond and mortgage markets.  Crude oil price is higher again, over $50.00 in early activity. The OPEC output cuts that surprised many yesterday has moved oil prices up $5.00/barrel since Tuesday. It was the first production cut in eight years, 1.2 million barrels a day. How long the cuts will remain is being debated in the oil world.

To add more fuel into all of this, Russia said it will join with OPEC's cuts and said it would cut 300K barrels per day during the first part of 2017. Also, it appears that several other Non-OPEC countries will join the deal including Azerbaijan and Mexico.

While oil is the headline the last 24 hours the main issues remain the increased concerns that inflation will increase with the Trump presidency - deficit spending, tax cuts and higher wages with the infrastructure spending advocated by Trump ( and Clinton also).

Bloomberg has a very important long term chart of the 10yr note going back to 1985, on how low the rates has gone and the path that it took, even with the various bumps along the way.  If you look at it now, it seems to be braking out of that range/path it has been on for the past twenty years.

Currently at 11:00AM, we are seeing the 10yr push it ways up to 2.47%.

The FOMC meeting in two weeks. There is now a lot of speculation on what they will do, as the information contained in the policy statement will give to all of us information on what they (the Fed) are thinking now with the Trump’s win and his plans? Likely nothing specific but should provide clues for the next increase(s).

Inflation has been the Fed’s concerns for the last two years, trying to get it higher. Now with infrastructure spending, tax cuts and higher wages expected, mix in the current increase in oil inflation is believed to be going higher with some thinking it will heat up more than consensus expectations.

The last three weeks have been extremely volatile for mortgage rates.  A lot of things are going right with the economy which is putting pressure on mortgage rates while the markets reposition for potential real economic expansion.  Look for continued volatility through the rest of the week.  Tomorrow could be a very volatile day with the Nonfarm Payroll numbers due out in the morning.