Mortgage Rates Roughly the Same

Mortgage rates had an uneventful day, holding roughly the same levels as those seen yesterday and the day before.  In this case, a lack of movement is a good thing considering rates are very close to their best levels in more than 5 months.  In fact, only 2 days have been any better during that time.

We saw very little change this week in the bond and mortgage markets, but did see the 10yr and MBS prices improved slightly. Equity investors were turning a blind eye to most of the soft performance, as there was nowhere else to go. How much longer depends, as Yellen says, is data dependent. Investors and money managers appear to be oblivious to weaker earnings and weaker forward guidance. The key word, appear - no one is ignoring any of it. Unless there is a huge change in global outlooks and the Fed gets behind the markets by increasing the FF rate soon (and that is highly unlikely now), the ice money managers are standing on is becoming thinner each week.

Next week housing starts and existing home sales are the headlines, overall next week is short of key domestic data. On Monday morning when we start China will have released its industrial production data and GDP report. Since markets here rely on news from the global economies and especially China, the GDP report will set the tone for Monday morning. Trading next week will be mostly driven by global news. As next week age’s markets will increasingly be concerned with the FOMC meeting starting on October 27^th.  The Fed will not increase rates - the policy statement is not going to be much different than the last two statements.

I remain technically bullish for the near term on interest rates, however as noted through this week, the driver for long dated rates, the 10yr note, is struggling at 2.00%. We cannot get below it and hold so far. Having a handle on the note is psychologically hard to achieve. If more weakness is seen in global markets we will get the move. Stocks are vulnerable now but hanging tough because the Fed is confused and does not have the confidence to move. The Federal Reserve is floundering under Yellen suggesting she gets tough and tells the regional Presidents t shut up with their confusing comments and outlooks - too much transparency is not a good thing.

In summary, it appears we are gonna be stuck in the current trading range until we get the FOMC announcement on the 28th.  Until then, I do not suspect we will see much gains in pricing and more likely we will probably trend toward the higher part of the range.  I have suggested to a few of my clients that they should be safe to float till Monday, but more than likely I will be looking to lock loans sometime early next week.