Mortgage Rates Slightly Higher

Mortgage rates moved slightly higher again today, casting a bigger shadow on last week's improvements.  Rates have not yet returned to the higher levels seen at the beginning of last week, but they are quickly closing the gap. The terrorist attack in Brussels today, 31 dead at the last count I heard - but the initial safe haven moves into treasuries and other safe assets that might have been expected, did not happen. There was some initial improvement early this morning in US treasuries but once it was apparent investors were taking it less seriously on a global perspective interest rates increased here. Not much but enough to make it clear that Europe and US markets were not frightened prices of mortgages declined this afternoon with some banks re-pricing lower this afternoon. I am now leaning more to a lock mode even though this is still a bearish interest rate market, the attacks have not had any effect on the technical bearish outlook. According the latest news ISIS is taking responsibility.

Pushing against any safety thoughts into treasuries, there were a couple of data points this morning that were better than forecasts. The March Richmond Fed manufacturing index much better than thought, and the services PMI also beat expectations.

The FHFA is considering principal reduction for borrowers underwater and have not been making payments. FHFA saying there may be a resolution within the next 30 days. It is not anywhere a done deal but as Director Mel Watt said today, "It would not be an overstatement to say that this has been the most challenging evaluation the agency has undertaken during my time as director."

Tomorrow we will have February new home sales. Expectations are that sales to have increased, even though we saw Monday February existing home sales dropped by a huge margin.  WE will alos have weekly crude inventories.   No Fed officials are scheduled tomorrow. Nothing has changed as the techs remain bearish.

In summary, today's terrorist events in Brussels typically would have yielded a greater move lower in interest rates.  The lack of the move lower can be attributed to a few factors, including the desensitization of these events, and the limited shock value they carry, or potentially the reality that bond bears are winning the fight.  Good news today is that rates have not moved too much higher. This week will be plagued with holiday schedules, therefore we might have to wait till next week for any movement in either direction and that is why I am now favoring a lock position for the loans closing in the next 30 days.