Mortgage Rates Not Moving Even With Weak Data

Mortgage rates are moving sideways todays with no real push one way or another.  Retail sales this morning took a big dip, as it was supposed to be a positive number but came in with a negative number.  A huge miss, but according to the initial chatter from economic bulls, it was due to Harvey. That, of course, does not explain the significant revision lower in July sales. The reaction did not move MBS prices higher or a decline in the bellwether 10yr, both generally unchanged from yesterday. With the FOMC meeting next Tuesday, investors and traders are more focused on it than weak data. The optimistic view is that September retail sales will be substantially better. Meanwhile, Amazon also had very weak sales in August.

The September NY Fed Empire State manufacturing index did come in better than anticipated.  A bit later, we got the August industrial production number, again, thought to be positive, was negative. July business inventories was the only number that came in line.

Yesterday it hit the wires that North Korea launched another missile over Japan. As recently as last week, that would have driven safety trades - but nothing happened in the bond, gold or currency markets. The world seems to have come to rest with NK potential threats. Yesterday Kim Jong-un and his Peace Committee (oxymoron) threatened Japan with annihilation. His Asia-Pacific Peace Committee saying, “Japan is no longer needed to exist near us.”

A homemade bomb exploded on a packed rush-hour commuter train in London, injuring 22 people on Friday, police said, in what was being treated as the fifth terrorist attack in Britain this year. 22 people were taken to London hospitals. None were thought to be in a serious condition.

Tax cuts timetable is September 25th when the “plan” will be released. Meanwhile, Dems are sounding caution, which is not surprising. Senate Finance Committee will not sit still for the plan drawn by Republicans and the Trump administration. Everyone wants tax cuts. Getting there is like trying to climb El Capitan with one hand.

The 10yr testing its 100-day average this morning after an intraday run to 2.23% yesterday morning. Most of the news this morning should be bearish for stocks and positive for interest rates, but that is not happening. Do not fight the tape. Weak retail sales, weak industrial production, NK launching another missile, soft consumer sentiment - none has had any noticeable impact on markets.

With the weak retail sales numbers and the geopolitical events noted above, I do not expect mortgage rates to move out of this relatively tight channel.