Mortgage Rates Closing in on Higher End of Range

Mortgage rates looked as if they were going to shoot higher this morning when I wrote my report, but subsided by the afternoon as there was no real news - but the froth in stocks shows no signs of backing down. There was an IPO today, Snap, after the opening the stock jumped sky high from the open. Must really be getting old; up 50% from the open set price, the biggest technology initial public offering in the U.S. since Alibaba debuted in 2014.

The interest rate market remains in its narrow range that has lasted now since the first trading session this year, as well as the same with the dollar. Talk of an interest rate cut is all but certain now. The only thing that will derail the increases is next week’s Feb employment data - and I doubt that will happen. Janet Yellen will be speaking on Friday at Noon to the Executives’ Club of Chicago. Markets will be tuned in. The FF futures trade still running about 70 to 80% probability. Not only Yellen tomorrow but other Fed boys will be active before the lockdown (this Saturday) for Fed officials making any public comments until after the FOMC meeting.

The only data point tomorrow is the February ISM services index.  After the big unexpected increase on the ISM manufacturing index earlier this week, most likely the service sector index will be better than expected. If so it will be more fuel for the stock market mania. Most attention tomorrow will be on Janet Yellen’s speech at Noon.

In summary, rates are once again getting close to the higher end of their post-election range.  Sometime soon, this range will break.  If it breaks higher (or even if it is threatening to break higher), it makes most sense to be locked, if possible.  Even at current levels, to float would be to put a ton of confidence in prevailing range (basically if the ceiling will remain intact).  While that could work out well for you if you are right, it would also hurt more than normal if you are wrong.