Mortgage Rates Continue in Tight Range

Overnight, the bellwether 10 yr yield dropped to 2.15%, but as soon as the US markets began trading at about 7:00AM, the 10yr jumped back to where it closed yesterday at 2.16%.  MBSs are still trading in thin conditions, accentuating swings in prices. Early this morning, the weekly MBA mortgage applications were up 0.6% overall, but the purchase apps declined while there has been a flurry of last minute people who are still refinancing.  The reason for Purchases being down is the supply, but this is not new news – it is what it is.

Hard to find any near term significant global or domestic news today. Yesterday, Paul Ryan opened the tax cut debate. The US shot down an Iranian armed drone in Syria, escalating tensions between the US and Russia, but just talk so far. Syrian forces moved toward a base that trains rebels to fight ISIS; leaflets were dropped across the area warning, “Any movements toward al-Tanf will be considered an aggression that our forces [will] defend against...you have entered a safe zone, leave the area now.” North Korea sent a dying boy home after torturing him for a year and a half. The global concerns remain, but these days the world and markets have learned to take it in stride--for the moment.

The election in Georgia to fill a congressional seat was the most expensive ever launched for a House seat. Democrats and media were painting the election as a referendum on Trump’s presidency, spending over $30 mil while Republicans anted up about $20 mil. Before the election yesterday, the polls were close. The Republican won it in a close count.

The first major report this week was May existing home sales. Sales were generally expected down, but came in on a positive note.  However, April sales were revised fractionally lower, but not a factor.

Crude prices have been plunging recently.  Technically, oil has entered a bear market, declining over 20% from the high. A 20% drop or increase defines a bear or bull market. Media is all over it, as the WSJ, Bloomberg and Fox all making it a headline this morning.

Republicans in the chamber have been working for weeks behind closed doors on legislation aimed at repealing and replacing major portions of the Affordable Care Act. Tomorrow they are scheduled to release their draft bill. Likely it won’t go down well with Democrats, as the future of the Medicaid program for the poor and bringing down insurance costs are contentious issues yet to be resolved.

Interest rates continue to be very stable, with no movement now since last Thursday, chopping in a very tight range. Technicals remain bullish, but there is not much difference now between bullish and bearish.