Mortgage Rates Higher Again

Mortgage rates moved slightly higher again today, pushing farther into the highest territory since late January.  Today's move was not that big, in and of itself.  The problem is the frequency with which these moves higher are occurring.  In fact, rates have only moved lower on one occasion this month. I know that I must be sounding like a broken record and this must stop.

In outright, historical terms, things could still be much worse. The equity markets rallied today, the US indexes higher with crude oil moving quickly to $40.00. Interest rates continue to increase ahead of the FOMC meeting next week. The 10yr note closed at 1.99% knocking on the technical and psychological 2.00% support. Recent support points as yield have increased have fallen with little effort to hold the line. Once crude hits $40.00 and exceeds it, in this confused market, I expect rumblings will increase that higher oil prices may slow down consumers.

There is no pleasing investors or money managers now. Central banks are adrift, lots of talk about the Fed next week. No rate increases and the Fed based on all of the comments from officials have about as much of a handle on the next moves as the Republicans have about what to do with Donald Trump. Draghi’s performance yesterday a good summation on central banks and their comments - he has pounded the podium the ECB has the bullets and he used a few yesterdays but then he tossed a grenade with his comments that there will be no more stimulus. Does he really believe that?

Next week on Tuesday the FOMC meeting begins, concluding on Wednesday with the policy statement and Janet Yellen’s press conference and the Fed’s quarterly outlook for growth, inflation and employment. After this week’s lack of economic data, February PPI and CPI, March Empire State manufacturing index, February housing starts and permits, February industrial production and capacity utilization, February leading economic indicators, March Philly Fed business index, and the U. of Michigan consumer sentiment index. After a week of peace from Fed officials, once the Yellen press conference concludes Fed officials will come out of hibernation with their varying opinions to confuse markets even more.

In summary, rates continued their steady march higher today as both stocks and oil move higher. I am not a fan of locking on Friday's but the trend is the trend until it is not, so locking today may have been the right call. I am confident that rates will move again lower, but the timing of that move is in question. At some point, oil traders are gonna realize we have way too much oil and are producing still way too much oil, so oil prices will fall which will help take bond yields with them.