Mortgage Rates at Highest Point in a Month

Mortgage rates moved to their highest level in over a month.  In general, we saw lower prices all day in the MBS market but generally it was quiet with not a lot of movement through the day. The 10yr note yield is at 1.91% where it has been all session. No domestic economic releases today, nothing tomorrow and not much all through the week.

Fed officials were out today as they keep on stating that the Fed’s worries that inflation will actually pick up – sometime - somewhere. There will be no rate increases this year until this fall according to those that trade on the bet. This is an election year and although there is nothing cast in cement the Fed, unless it finds it absolutely necessary, won’t roil markets into the election. You will hear a lot about that idea as the calendar clicks off, that the Fed does not pay any attention to politics and elections. Those espousing that just looking for ink and headlines - the Fed does pay attention to politics and tries not to become involved if avoidable. Especially now - recall the recent Yellen testimony and politicians pushing for more control over the Fed.

Crude oil is still climbing today on the way to $40.00. To resume shorting oil traders will need a sizeable increase in prices from the lows, but I believe $40.00 may tempt some shorting but the huge drop has likely ended and highly unlikely now crude will meet that $20.00 target many were expecting six weeks ago.

January consumer credit increased the least since Nov 2013.  Revolving debt, which includes credit cards, declined $1.1B, the first decrease since February 2015.

In summary, bond yields drifted higher today, despite no significant economic motivation. The rest of the week features treasury auctions and an ECB policy statement, which could impact pricing. The trend (at least short term) is towards higher rates now, and my pipeline is locked less than 30 days from closing. The bad news is that we are now nearing the highest rates since January. The good news is that we are still under 2% on benchmark treasuries, and January's pricing was not unappealing, just not as low as we have enjoyed since.