Mortgage Rates Moved Higher Today

Mortgage rates finally moved higher after we have seen a run of solid improvement over the past two weeks, especially what we saw this week – until today. It was not a good day in the bond and mortgage markets.  You know what I am about to say - the 10yr has very strong resistance at 2.35%, dropped to it yesterday (2.33% intraday but closed at 2.34%). Since the beginning of January every attempt to move below it has ended in defeat. 

Treasury auctioned $15B of 30yr bonds this afternoon.  Again, the outcome was not good, but OK, compared to last month’s auction. 

Trump signaled he would advance campaign promises to lower taxes helping stocks. Commenting this morning Trump said he would make an announcement that would be “phenomenal in terms of tax” within the next three weeks. Pressing bonds today, the dollar stronger. Trump met with airline leaders today, telling them he will reduce regulations and increase infrastructure upgrades.  With this, airline stocks improved.  Sector business leaders have been coming in and out of the White House since the inauguration.  I wonder if Trump would say, jump into the reflection pond, how many would do it - odds very high that business leaders, would holding hands with stock investors. 

There has been very little economic data this week, leaving markets to look elsewhere to focus. Not much different tomorrow as we get January export and import prices and the U. of Michigan consumer sentiment index.

The last two weeks have been tough because of the bearish technical look.  When we finally got some better technical reads the recent improvements ended. Bonds pulled back today after the biggest three-day price gain since June as President Donald Trump said he would announce a tax plan in the next few weeks.

In summary, today was not what we were looking for but you cannot win them all.  Locking in gains now would not be a bad idea for short term closings.  Longer term I am not convinced today marks the end of a trend.  I would be willing to float though a small amount of additional losses from here.