Mortgage Rates Improve Following the Release of the GOP Tax Bill

Mortgage rates improved moderately today following the release of the GOP tax bill and confirmation of Jerome Powell as Trump's Fed Chair nomination, just as was expected.  "Confirmation" really is not quite the right word in this case because Powell does need to be technically "confirmed" by the Senate before he's officially the new Fed Chair.  What we got today was simply confirmation that several weeks of rumors and press leaks were accurate. Bond markets (and thus, interest rates) had already moved in anticipation of the Powell nomination, and it ended up having limited impact by the time it became official.

The Republicans released the tax cut bill - 429 pages. The headlines for markets is cutting corporate tax rate to 20% from 35% and allowing complete write offs of spending on equipment by businesses. Looks like the first swallow has come without choking but there is a lot to be discussed and this is not going to as easy or as complete as the initial revelation appears. The DJIA continues to increase but the broad sector hardly reacting either way. Home builder’s stocks taking some heat over the plan to reduce the mortgage interest deduction.

Tomorrow is employment data, as the main focus on average hourly earnings expected +0.2% after increasing 0.5% in Sept; yr/yr expected +2.7%.

In summary, bond markets reacted well to Jerome Powell's formal nomination to Fed Chairman, and posted moderate gains. I cannot call this a trend yet, but with a few greener days it could become one. Tomorrow's NFP jobs report almost feels inconsequential, as gains are less important than inflation data these days. Conservative borrowers should lock here, those who do not mind a modicum of risk may want to see what tomorrow brings.