Mortgage Rates Rally

Treasuries finally bit the bullet and rallied today on weakening oil prices, no inflation the rate market heading lower. MBS prices jumped on for the ride. The 10yr dropped to 2.10% at one point, the lowest level since the end of October. Going lower - I expect more rate declines as equity markets awake to the realization this year will not be good for equities. Yesterday I reported that I had been seeing the lowering of the stocks even further and now this run lower in equities has a lot more to go. Probably choppy but at least another 10% to 15% down for the DJIA and the other key indexes. Now hearing a few prior bulls calling for selling everything.

The Fed is not going to increase the FF rate 1.0% this year in four moves as Janet Yellen and other Fed officials staunchly believe. Clueless is the Fed and all other central bankers. Markets enthralled with job creations, always pushing aside that jobs created are for the majority low paying. The housing sector will also be slow this year - rates will remain low but possible first home buyers see little reason to buy even though they have more money in their pockets as gasoline prices decline. Last year bullish equity markets were “convinced” as never before that lower energy price s would drive consumer spending. Consumers smarter than that, the only sector in the world doing well and optimistic are the wealthy, their turn is coming quickly.

Treasury sold $24B of 3yr notes this afternoon with a strong yield. Tomorrow Treasury will auction $21B of 10yr notes, re-opening the 10yr issued in November. Crude oil went below $30.00 briefly today but settled down $0.85% at $30.56. A number of commodities set new lows as deflation creeps slowly in. The Fed still taking about getting ahead of inflation before it begins to increase, tilting at those windmills.

The State of the Union tonight. Always a great sleeping pill for those that have trouble falling asleep.

Every technical model and all of our momentum oscillators now bullish. The stock market had another volatile day, swinging back and forth but ended higher - still a few looking for an entry to ride the indexes back up -  good luck with that. Money moving quickly into treasuries with global stock markets now outright bearish. Expect volatility however in both stocks and bonds.

In summary, another great rally to add on the recent momentum. We are at a crossroad whereas locking is making sense on most fronts. The trend however is indicating that we may continue to move into better territory. As always time value plays the biggest role in locking today. All loans on the board for the next 10 days should be locked, 15-30 have some time to play but based on the range today's move would constitute locking in.  Until we break the lower resistance levels, locking in makes the most sense.