Mortgage Rates Showing No Movement

Mortgage rates showed very little movement today.  What is disappointing is that even though we had a nice bump yesterday in MBSs and the 10yr, the various banks held back as we are heading into a three-day weekend. Overall, the narrow range that we have been in is not showing any indication that the rates will move from this one way or another.

This afternoon Treasury sold $28B of 7yr notes, and unlike yesterday’s strong bidding for the 5yr auction, the 7yr was not as solid, although it was OK.

So much for the rally in crude oil over the last few sessions, as crude declined $2.70 dropping half of the recent gains on hopes OPEC would decrease its output.  OPEC did extend the November cuts for nine months to March 2018, but that was expected. There is little likelihood that crude can increase much, as I have noted numerous times here, supply exceeds demand, that is all that you need to know.

Stock indexes continue to increase as the NASDAQ and S&P pushing new all-time highs. Money however has yet to abandon safety in treasuries. The long weekend, the Manchester attack, the escalation of tensions with North Korea beginning to mass produce ICBM missiles, and now the US playing games with China in the South China sea sending a fleet of warships into the area. Nothing immediate but taken together keeps safe haven moves holding the US Treasury rates low. Then yesterday’s FOMC minutes did cloud the view that the Fed may hold off in June. Doubt the Fed will hold off but comments that inflation is still not achieving the Fed’s target of 2.0% also encourages the long end of the yield curve.

Tomorrow morning brings the week's most significant economic data in the form of GDP and Durable Goods.  Neither of these will necessarily cause any drama for mortgage rates, but if they fall far from economists' expectations, they certainly could push rates off their flat trajectory.  Otherwise, it looks like we're on cruise control heading into the 3-day weekend (markets and mortgage lenders are closed on Monday in observance of Memorial Day).

In summary, bond traders apparently started their Memorial Day hiatuses early, as markets were unchanged.  We are still near 2017's best pricing, and looks like bonds are quite content to remain in the current range.  Tomorrow will likely be even more sedate than today, appears to be limited risk/benefit to floating here.  Folks within 30 days of closing should consider locking, unless they enjoy bond market "action" & “gambling”.