Mortgage Rates Sideways to Start the Week

This morning, we have seen very little movement with mortgage rates and the bonds that affect mortgages, as well as the stock market has been flat since the open. At 11:00AM, we are seeing the 10yr at 2.33% and the DOW up a bit and the NASDQ down a bit.

This morning, it is as always on the Monday following Black Friday - comparing shopping and focusing on Cyber Monday estimated sales. Early reports have been encouraging, with the increase in online sales compared to big box stores. Reports that brick and mortar stores held well compared to the worries that grew prior to last week.

Besides Holiday shopping, this week has a full calendar to think about. Janet Yellen set to testify at the Joint Economic Committee on the economic outlook. Q3 GDP, October personal income, and spending with the PCE (the Fed’s favorite inflation gauge). November auto and truck sales due on Friday are thought to be weaker than last November even with huge deals being offered to move a lot of unsold 2017 vehicles. Early thoughts for US manufacturers is that new vehicle sales will likely drop a bit from November 2016.

Congress comes back this week to work on the tax cuts and before December 8th. They must pass another resolution to add to the deficit in order for Treasury to pay its bills. Presently the consensus appears to be that the House and Senate will cobble an agreement for a tax bill before the end of the year. Markets generally believe it will happen before the year-end. The House has passed its version and the Senate is expected this week - then to a conference committee to hash out the differences between the two. That is where the real work will likely be somewhat contentious.

Earlier we did get October new home sales came out very good, but comparing to sales in 2005, still comparatively low. 2005 was the last year new home sales increased. From there, sales have pulled back as 2005 was the beginning of the housing bubble bursting.

There still is no significant movement in long-dated interest rates. No selling and equally no buying as investors continue to hold long treasury debt and in turn, keep mortgage rates generally unchanged now for the last two months. Stock indexes increasing, but the recent volume has been thinning with less activity after months of big daily increases. Global sovereign debt yields continue to hang around zero percent encouraging investments in US debt with higher rates. It’s a massive parking lot for investors wanting to park money away from what is widely thought to be over-valued stock prices.  A convenient way to hedge against any equity market selloffs is putting money in safe US treasuries.

Last week mortgage rates barely moved. This week could be a totally different story. We get several economic releases this week that can move mortgage rates.