Mortgage Rates Seeing a Little Bit of Volatility Today

Mortgage rates are moving sideways thus far today despite some pressures from some positive economic news this morning.  Overnight the US three key stock indexes were trying to do better, then started off on the negative side when they opened, but have been in positive territory since 9:00AM (m0ore on this time later).

Early this morning we got February advance US trade deficit, which came in a little bit better than anticipated.  Later we got the Advance Wholesale Inventories and the January Case/Shiller 20 city home price index, of which the numbers were in line on what was anticipated. 

The big news came out at 9:00AM, when the March consumer confidence index from the Conference Board was expecting a bit of a decrease from February’s strong number, but that was not the case as it came in again and blew the doors off.  Consumer confidence since the elections last November has continued to climb, due primarily on the consumer belief that health care costs would decline, the stock market would rise to the sky and tax cuts would increase the pay envelope. Consumers are excessively confident but measured against retail sales, auto sales and other consumer spending, this huge number isn’t directly translating into the economic improvement.

The reaction sent the 10yr note yield higher back to where it opened at 2.38%, and has the MBSs hitting negative 12BPS as I prepare this for my 11:00AM report.  Also, we have seen a change in the stock market as it has also responded positive on the news.

Later today we will have the Treasury auction $34B of 5yr notes.  Yesterday’s 2yr auction met with mediocre demand, not bad but also no blue ribbon.

Mortgage rate volatility is a little elevated today.  House Speaker Paul Ryan will be holding a press conference later today. If he makes it appear that the house is coming together on a tax plan, we could see a spike in rates. On the other hand, we have Brexit which continues to help keep a lid on mortgage rates.