Mortgage Rates Should Remain Relatively Calm This Week

We are now starting the final week of 2016.  I hope everyone had a very nice Christmas, and to my Jewish friends still celebrating Hanukkah.  Mortgage rates have started a little worse this morning after last week’s slightly upturn.

This morning the CoreLogic Case/Shiller 20 city price came in as expected.  The Conference Board reported the December consumer confidence index exploded to the highest level since August 2001. Not a total shock given the way markets have performed and the holidays. Even though there was no reaction to this news, at 11:00AM, markets are showing the 10yr is at 2.58% and the MBSs are in negative territory erasing most of the gains we saw last week. This afternoon at Noon Treasury will begin the week’s borrowing with $26B of 2yr notes.

Nothing has changed in the bond and mortgage markets - both bearish but very little overall movement over the last week and a half. Stocks making a run to the 20K level for the DJIA, as the equity markets are totally in on Trump’s presidency. I would not stand in front of the present mania but I will not buy at these levels. It is now a little more than three weeks before Trump moves to the White House. His slate of appointees looks like a who’s who of billionaires and millionaires, strong minded generals and a couple of politicians thrown in. Some of the appointees may have a little hard time being confirmed although in the end most like all will be.  If you want to read more, the WSJ today is writing about it. More importantly, how rapid can Trump achieve his goals and what markets are currently betting on? I do not believe it is going to occur as quickly as is expected now.

This should be a relatively calm week for rates.  Look for the markets to stay in a tight range this week unless something major happens.