Mortgage Rates Bracing for the News Next Week
Mortgage rates moved just a little bit higher for the second day in a row, even though the rate may not have changed, the costs to get the rate may have been the deciding factor. Once again, not much movement today until late in the day </strong>when the stock market kind of came unglued.
I have been suggesting to lock the last few days, expecting what has happened - some back up in rates and lower MBS prices, mainly because of next week’s heavy calendar lead by the Fed. Technicals for the short run have resistance on the 10yr at 2.20%. This afternoon the NASDAQ came under strong selling (at one point -175) after making new highs almost every day. The tech sector has been on fire recently and opened this morning better in the NASDAQ - too much in too short of time. Not willing to go out on the limb but I have been looking for a stock market reversal for a nearly three months now - it is coming at a market near you, but that one day is not definitive.
Not sure what if anything is going to occur with the Trump/Comey event, as long as markets are not interested, I am not going to try to predict the what-ifs - but I have been reading today a number of legal scholars and the overwhelming conclusion is that he will not be charged with a crime, be prosecuted or any other court instigated potential. No sitting president has ever been indicted. In the Nixon case special prosecutor Leon Jaworski concluded that a sitting president could not be indicted even though there was no doubt Nixon did commit a crime. “One has to look at the big constitutional picture, rather than the specific and disputed evidence,” said Alan Dershowitz. “Under the constitution, the president controls the executive branch of the government and . . . would have the power to tell the FBI director who to investigate, who not to investigate, who to prosecute, who not to prosecute.” That is pretty much what other legal scholars are saying also. That is the reason markets are appearing to push it aside. Even if there is a crime a president cannot be indicted according to scholars and precedent. This a political issue, not legal. That of course is not how the media is reacting, trying to make a case that appears cannot be made.
An exceptionally busy calendar in the coming week has been causing some anxiety for market participants (the traders whose decisions affect rates on a day-to-day basis). In addition to several important economic reports, we also hear from the Fed on Wednesday. The Fed is almost certain to hike rates at this meeting, but investors are more interested in any changes to the Fed's verbiage and forward rate-hike forecasts.
In summary, with rates still close to long-term lows, risk-averse clients are well within their rights to err on the side of locking. Even the moderately risk-tolerant clients may wish to consider the fact that rates have bounced twice now at inflection point seen in mid-April. More risk-tolerant clients can continue taking heart in the fact that the broader trend has been toward lower rates, both over the past 30 years and the past 3 months. If you choose to float, just make sure you have a strategy in place with your loan originator.
I have been suggesting to lock the last few days, expecting what has happened - some back up in rates and lower MBS prices, mainly because of next week’s heavy calendar lead by the Fed. Technicals for the short run have resistance on the 10yr at 2.20%. This afternoon the NASDAQ came under strong selling (at one point -175) after making new highs almost every day. The tech sector has been on fire recently and opened this morning better in the NASDAQ - too much in too short of time. Not willing to go out on the limb but I have been looking for a stock market reversal for a nearly three months now - it is coming at a market near you, but that one day is not definitive.
Not sure what if anything is going to occur with the Trump/Comey event, as long as markets are not interested, I am not going to try to predict the what-ifs - but I have been reading today a number of legal scholars and the overwhelming conclusion is that he will not be charged with a crime, be prosecuted or any other court instigated potential. No sitting president has ever been indicted. In the Nixon case special prosecutor Leon Jaworski concluded that a sitting president could not be indicted even though there was no doubt Nixon did commit a crime. “One has to look at the big constitutional picture, rather than the specific and disputed evidence,” said Alan Dershowitz. “Under the constitution, the president controls the executive branch of the government and . . . would have the power to tell the FBI director who to investigate, who not to investigate, who to prosecute, who not to prosecute.” That is pretty much what other legal scholars are saying also. That is the reason markets are appearing to push it aside. Even if there is a crime a president cannot be indicted according to scholars and precedent. This a political issue, not legal. That of course is not how the media is reacting, trying to make a case that appears cannot be made.
An exceptionally busy calendar in the coming week has been causing some anxiety for market participants (the traders whose decisions affect rates on a day-to-day basis). In addition to several important economic reports, we also hear from the Fed on Wednesday. The Fed is almost certain to hike rates at this meeting, but investors are more interested in any changes to the Fed's verbiage and forward rate-hike forecasts.
In summary, with rates still close to long-term lows, risk-averse clients are well within their rights to err on the side of locking. Even the moderately risk-tolerant clients may wish to consider the fact that rates have bounced twice now at inflection point seen in mid-April. More risk-tolerant clients can continue taking heart in the fact that the broader trend has been toward lower rates, both over the past 30 years and the past 3 months. If you choose to float, just make sure you have a strategy in place with your loan originator.
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