Mortgage Rates Moving Sideways Today

Equity markets this morning are trading on the news that the tax cut bill will be voted on this week, Republicans have the votes at the moment. President Trump likely to achieve his goal of a signed bill by Christmas. Steven Mnuchin, US Treasury secretary, told Fox News on Sunday that he had “no doubt” that the “terrific” tax bill would be passed this week. He added that tax cuts should start in February “because we have the IRS already working on new tax tables”. The 503-page bill was published late on Friday afternoon, after negotiations between Republicans in the Senate and the House of Representatives. 

CNBC All-American Economic Survey found that for the first time in at least 11 years, more than half of respondents to the survey rated the economy as good or excellent, while a near record 41% expected the economy to improve in the next year. “We're not measuring a marginal change in the economy, we're measuring a different economy,” said Public Opinion Strategies’ Micah Roberts, the Republican pollster for the survey. The poll of 800 adults across the nation, with a margin of error of 3.5 percentage points, was conducted December 10-13 by that firm and Democratic Pollster Hart Research. The survey found that 42% of Americans expect their wages to rise in the next year, and 41% of homeowners see their home values going up, the highest level recorded since 2007.

The only data today, December NAHB housing market index expected unchanged at 70; as reported the index hit 74, the highest level since July 1999.

Markets will get another look at inflation on Friday when personal income and spending is reported along with the personal consumption expenditures. The bond and mortgage markets continue to hold in their now three-month ranges with very little movement. The lack of inflation overriding the increasing equity markets, keeping the 10 and 30 from increasing and keeping mortgage rates tied to narrow ranges.

You will hear a lot about the debt ceiling about to expire this Saturday; a government shutdown if the debt ceiling isn’t increased…not to worry or be concerned—the government will not be shut down because the politicians will do what they have done most of the time over history: an increase will happen.

Still no change in the technical analysis as most of the models and other indicators are holding neutral as you would expect with no movement for months. The lack of inflation and Fed and ECB comments that inflation is not likely to increase soon is keeping the 10yr and 30yr unchanged, and MBSs tied tight as well.