Mortgage Rates A Little Bit Better

The bond and mortgage markets opened better this morning and then spent the rest of the session sitting quietly. There was no direct economic news today ahead of Treasury auctions that begin tomorrow with $24B of 3yr notes, Wednesday the more critical (for mortgage markets) $21B of 10s. Tomorrow April wholesale inventories are expected to have increased. 

The G-7 meeting in Germany ended today. Germany’s Angela Merkel said G-7 members agreed with her that Greece remain in the euro currency bloc and agreed with her insistence that Prime Minister Alexis Tsipras must deliver an economic program that can satisfy the country’s creditors. Greece rejected the terms of an aid package last week that could prevent Greece being forced out of the euro. Tsipras’s government last week used a technicality to postpone a payment of about 300 million euros ($336 million) to the International Monetary Fund, In the meantime a sift brewing ion Germany between Merkel and German Finance Minister Schaeuble is widening over Greece as the funding standoff goes down to the wire. Merkel is ready to make concessions to keep Greece in the euro because of geopolitical concerns, while Schaeuble is willing to let the country exit the euro unless its government takes measures to ensure the country’s long-term survival. Nothing new here -  the can they been kicking is in the process of being replaced as it is completely obliterated now.

Bloomberg reporting today that there at the moment 13 cities that millennials (those who were born between 1977 and 1994) have been completely priced out of the housing markets. Most of the country millennials earning enough but either do not have down payments or simply would rather live in a new apartment. With no inflation in housing little economic push to purchase (invest).

In summary, nothing has changed in markets today - a little bit better but not a surprise. The 10yr rules, a hard resistance at 3.33% now 2.39%. After last week I sure was happy to see bonds trade in positive territory. Going forward one thing is for certain people are going to either be happy they locked or wish they floated. The market may have over reacted and sent yields higher than where they should be and getting to more normal levels may happen in the near future. Much like when you turn on the bath water if it is too cold or to hot you may over compensate in the other direction until you find the right temperature. Until we see how the market trades the next couple of weeks it will be hard to tell if the market over reacted or is we found a new normal for rates. Right now, until I see some positive direction lower, I am still locking all within 30 days of closing.