Mortgage Rates Trending Lower Today

Mortgage rates are trending lower this morning.  Even with the improvement we saw in the MBS market yesterday, this was not enough to improve mortgage rates or fees.  Mortgage rates continued to trade in very narrow channel with relatively low volatility.  Global increases in tensions (Syria and N Korea) keeping safe haven treasuries from increasing but the concerns momentarily are not considered serious now. The stock market hardly changed yesterday and early this morning in futures trading also flat.

The February Job Openings and Labor Turnover Survey (JOLTS) showed a massive amount of jobs that were unfilled. Even though the Small Business Optimism index for March came in a tad lower than anticipated, the reading is still at a very high level. Today we have an important 10yr note auction at Noon.

Once again, at 11:00AM while I complete this report, we are testing 2.32% for the bellwether 10yr Treasury – it seems like it just cannot break below it and close below it. Geo-political concerns with Russia/Syria and North Korea and a rather flat stock market keep safety trades alive short term.  A break below 2.32% on the 10yr will require a break in stocks or increased concerns of escalating geo-political fears. The technicals still hold bullish biases with not much change in equity or rate markets the past two weeks. The longer look - unless geo-political concerns escalate interest rates will move higher as the year moves, the Fed and ECB both moving to remove stimulus (the low FF rate and the ECB talking more about reducing its QEs. Fundamentalists (economists and many analysts) still painting a very rosy economic outlook but money actually being employed still are not confirming that positive view.

France's potential exit from the EU and the tensions with Russia are helping to support the MBS market (low rates).  This is keeping mortgage rates very flat at these historically low levels.  I do not see anything coming out today to cause mortgage rates to move significantly in either direction.