Mortgage Rates Continuing Modest Bounce Back

Mortgage rates were slightly higher for the 3rd straight day, continuing a modest bounce back from the year's lowest rates last Wednesday. There was nothing of consequence today for the bond market to digest, as interest rates remain low, much lower than what most were thinking a month ago. The dollar cannot find support as it continues to move lower, now over 5.0% decline since early this year. The stock market had a nice day on tech stocks and defense companies after Trump and the Saudis announced a military build-up.

With the president out of town, the rumors, fake news, and all of the political mud has slowed. Tomorrow Trump is scheduled to meet the Pope. As long he is out of country even the media respects they do not have comments that would trump Trump’s trip (as has been the case for other presidents in the past).  

Tomorrow markets will get April new home sales and the Treasury will auction $26B of 2yr notes.

OPEC will meet on Thursday to continue production cuts and maybe even increase them. Crude has increased the last two weeks on the idea OPEC can reduce the supply of oil. A twist in the wind - so far the cuts have done little to nothing to reduce oil in storage tanks and we doubt OPEC countries can economically stand more reduction of income to achieve the massive supply/demand imbalance. Get the price high enough and the US and Canada will just increase production.  This is a race of who has the will power. The US and Canada are not dependent on the price as are OPEC countries. Oil storage has joined shale production as a symbol of a global glut of crude that has knocked OPEC on its heels. Since oil is priced in dollars, the dollar weakness pushes prices higher.  

In summary, bond markets idled close to unchanged today, in the absence of meaningful economic data or political drama.  It's encouraging to see 10yr near 2.25%.  While we are not at 2017 lows, we are reasonably close.  I cannot blame anyone within 30 days of closing who wants to lock here, nor would I discourage an informed borrower with more time from floating.