Nortgage Rates Steady

Mortgage rates have been steady today, and has been trying to gain some momentum to decrease as of 11:30AM this morning.  It still is surprising to see the stock indexes continuation on their run upward, as it seems like that has not at all shown signs of weakness.

Yesterday the Senate tax bill came under fire from technology, banking and other industries. The Senate on Saturday decided to keep a corporate alternative minimum tax, or AMT, a move that gave the senators $40B over a decade to use on other priorities, according to the official estimate. The corporate AMT is a parallel system with low rates and fewer breaks that kicks in if a variety of tax breaks bring a firm’s regular tax bill too low. “With a proposed 20% corporate rate, many companies could end up in the AMT - and lose some of their tax breaks in the process.” (WSJ). The tax bills into conference negotiations that will square the House and Senate bills that will end in a bill that Trump will sign - the path has been extremely smooth and quick so far, rather surprising given the importance of the tax overall being debated.

The October US trade deficit increased more than forecasts at -$48.7B with estimates at -$347.4B. The increase is a drag on Q4 GDP, but it’s an October report, so we have November and December yet to be accounted for in GDP analysis. Net exports get off to a weak start, comes in much deeper than expected and well beyond September's revised $44.9B. Exports, at $195.9B in the month, failed to improve, while imports, at $244.6B, rose a steep 1.6%.

The November ISM services sector index expected at 59.0 from 60.1 in October dropped to 57.4 but still strong. The October read at 60.1 was the best going back to 2004.  This does take a little wind from the sails.

Still trapped in narrow ranges, the bond and mortgage markets are holding at this time, as there has been very little change in rates for two months. Tax cuts are driving stock indexes to new highs as investors toss risk out the window presently. The technical analysis continues to be neutral, with balanced buying and selling keeping long-term rates stable. With little concerns about inflation driving rates higher, savvy investors foreign and domestic still willing to use the 10yr and 30yr note and bond as a hedge against the climbing indexes that many now believe are headed for a fall. The view that any day stocks will fall has been with markets for weeks but so far, it’s up, up and away.