Mortgage Rates Not Showing Much Movement

Mortgage rates have not done much over the past few days. Depending on your perspective, that could be good or bad.  On the positive side, the lack of movement means that clear trend toward higher rates in September is at least taking a breather.  On the negative side, it means rates have been holding near the highest levels in 2 months.

It was choppy in the bond market today. There was a survey conducted by the WSJ today that indicated that Kevin Warsh was likely to replace Janet Yellen. It didn’t last after the FOMC minutes were released at 2:00 PM, the minutes showed that Fed officials remained supportive of continuing the rate hike path, even though many participants expressed concern that low inflation measures may not be transitory after all. On a side note, a recent $20B 10-yr reopening made for the day's second strong auction, which stopped through the When-Issued yield of 2.346%. Overall the minutes did not reveal anything new, other than now some at the Fed are getting tired of Yellen’s belief that low inflation is ‘transitory’.  

Stocks continued their slow march higher and the bellwether 10yr holding support (2.40%). MBS prices firmed up today following yesterday’s slight price gains.

No key data today but tomorrow we get September PPI, and Friday we get CPI. Important inflation data but not what the Fed thinks is the best inflation view. Investors continue looking toward Friday's Consumer Price Index data as the next major flashpoint for interest rate momentum.

Increasing comments around the markets about the very overbought stock market that continues to defy all those concerns. This is October - a month wrought with stock market declines. Oct 29, 1929, October 19, 1987, Oct 7th, 2007 (that cut the DJIA in half over two years). Have not heard any financial pundits even bring it up. Given the history that traders are aware of it is somewhat curious that there is not mention of the history of October. Just saying. Still must go with the flow and not fade it just because October has history. Tomorrow Q3 earnings season gets underway, with most analysts expect OK earnings but not as strong as in Q2. Large banks may not perform quite as well as trading has slowed earnings.  

In summary, floaters hoping for bonds to rally continue to be disappointed.   It appears until something happens, bond traders will not take yields any lower.   So, the trend continues to not be our friend.  If within 30 days of closing, I would go ahead and lock.  I see no reason to risk floating.