Mortgage Rates Unchanged Before the Holiday Weekend Begins

Mortgage rates were broadly unchanged today, despite negative cues from underlying bond markets.  There is one more session before the end of the year and before markets return to complete staffing.  As I noted previously this week is hard to make sense of with most big money and influential investors sitting it out. Nothing unusual, as we have to endure it each year. The point is, this week whatever market you want to look at is set to mark time with no substantial news or change in sentiment. This year the S&P +25%, NASDAQ +30%, DJIA +28%; 10yr note yield unchanged from early January as is the mortgage interest rates.  

Tomorrow the bond market is scheduled to close at 1:00PM. In the meantime, whatever happens will carry little meaning into next week when we get back down to business. Trump is ready to hit the street running with infrastructure plans (more debt) and politicians dusting off their election rhetoric. Paul Ryan and Mitch McConnell ready to begin thinking about changing Medicare, Medicaid, and Social Security. Changes in those entitlements will be bashed back and forth but until after the election in November, I doubt any changes will be enacted - neither party wants to touch that third rail other than sending up trial balloons through the year.  

With no economic data tomorrow, the only care-takers will be manning trading desks. I will have a report tomorrow, but I do not see anything that would be worthwhile to read.

Since most of my readers will not likely to be working tomorrow, I want to wish everyone of you a very Prosperous New Year. 2018 going to be interesting and primarily driven by politics. Deficit spending, but no one really cares other than lip service. The Fed presently expected to increase the Fed Funds rate three more times, but it is a moving target based on inflation and economic outlooks (wage gains, stock market movements the ECB and Bank of Japan instituting their withdrawal of stimulus and zero and negative interest rates). Going into the new year most of Wall Street money managers and most of the traders outwardly looking for continued increases in stock values. It will not be the cake walk we had this year, but the optimism currently is at very high levels. Then there are those cryptocurrencies - Bitcoin and the hundred other air currencies.  The Bitcoin trading has settled down the last couple of days, but the interest is increasing - likely looking back in a few years Bitcoin will be filed along with tulip bulbs you were going to plant this fall.

In summary, while not convincingly holding below 2.43% on the 10yr is slightly concerning, without a convincing move higher in yield, I am advising my clients to cautiously float through the weekend as trading volume will be almost non-existent tomorrow and with Monday being a Holiday, this might be a good time to roll the dice.