Mortgage Rates Show No Movement after the Open

Mortgage rates started the day off on the higher side and mainly held that spot throughout as it was a very quiet day with little, if any, movement in the rate markets or stocks.  There was no data except the July Empire State manufacturing index, but even though it was off, does not have that much weight to it.

Tomorrow June import and export prices.  Yellen referred to the lack of inflation as a decline in import prices, I suppose she was thinking about oil (oil is not a factor in the import price data - but even a very soft dollar that should drive imports higher that is not happening.  The expectations for June imports is a decline of 0.3%. Export prices are expected unchanged from May. Imports exclude oil while exports exclude agriculture.

Also tomorrow the July NAHB housing market index expected at 68 from 67.  The NAHB data this year has been overly optimistic, likely most of it based on strong markets but overall home sales this year have not met last year’s sales.

Now health care is struggling in the Senate and still razor thin whether the Republicans will get the votes - being referred to now as ObamaCare Light. Even if it does pass the battle is not over. New York state Attorney General Eric Schneiderman intends to sue the federal government if Republican lawmakers pass it. He is saying there are "multiple constitutional defects" in the bill. A group of Democrats led by Schneiderman and California Attorney General Xavier Becerra earlier this year sought to intervene in a pending lawsuit in order to defend subsidies paid to health insurers under Obamacare.

If we cannot get a health bill passed - what are the chances of a tax cut bill? Nil. Infrastructure spending? Nil. If either sees the light of day it will be well into 2018, not this year although Republican leaders still talking the talk.  

In summary, bonds continue to run up against resistance around 2.32% on the benchmark 10 year note.   Until we see a break of this level, I think it is wise to consider locking, especially if you are within 15 days of closing.   With the ECB and Japan central banks meeting later this week, it is unlikely we see a decisive move in either direction until after both on Thursday.