Mortgage Moving Very Little - but in the Right Direction

Mortgage rates fell just a tad today, but again, the savings are seen in the improvements of upfront costs.  Today's Trump press conference and 10yr Treasury auction both saw bonds improve, but there was a pullback this afternoon as we saw the 10yr drop in yield to 2.34% and MBSs were up as much as 30BPS.  When all the dust settled, the 10yr ended where it started at 2.38%, and MBSs improved by 11BPS.

Trump has been hammering the auto industry for the last month, today he called out the pharmaceutical industry and bio tech at his first press conference since being elected. The result was swift and decisive.  The DJIA lost its 117-point gain and within 10 minutes it was back to unchanged before crawling back later. Later this afternoon the big Pharma’s were holding out a fig leaf saying the industry will co-operate with him. He railed about the high cost of drugs, that the US is the largest user of drugs and pays much more. Comments like the drug industry is getting away with murder. Trump said for the first time that he believes Russia was behind cyberattacks aimed at influencing the election. He said is the best job creator that god ever created.

The Treasury held a successful $20B 10yr note auction this afternoon, re-opening the issue from last August.  The rate/bid covers were the best out of the last twelve auctions. With the volatility today in the stock and currency markets, the dollar this morning was stronger, but by this afternoon a big turn to dollar weakening. Not just a minor flip - the dollar index at 9:00AM was at 102.59 +0.55 – at 3:00PM, it was at 101.81 -0.23.

Tomorrow weekly claims, December import and export prices, and another $12B auction of 30yrs reopening the issue from August.

In summary, bonds continued to march in place today, even though it did take a baby step forward.  Overall, with the volatility I have seen over the past 30 days, it seems like we have set into a range, which sure beats watching rates rise daily.  It appears there's minimal risk in floating/benefit in locking now, but no shame in locking, then sleeping soundly at night.