Mortgage Rates Did Not Change Today

Mortgage rates did not change too much today, keeping them in line with the lowest levels in nearly three years.  The bond and mortgage markets held up well today with the continuing weakness in equity markets pushing more money to treasuries. The DJIA at one point up 154 points but as the afternoon ran on it and the other indexes lost whatever momentum they had. I still believe the stock indexes are headed for a decline, last week not much drop - but the DJIA did lose 216 points.  Crude oil today continued to increase, no longer are stocks locked into oil but not totally discounting it either.

As I noted this morning, this week is heavy with key data, treasury auctions and Fed officials out in force. Today Janet Yellen actually went to the White House to meet with the President, the second time in her tenure and there is no significance in it for markets. There were no data today - tomorrow March export and import prices for March and Treasury will start with $24B of 3yr notes.

There is one event over night that will get attention, that is when the IMF will release its World Economic Outlook. For two years every time the IMF comes with its forecasts, the outlook has been revised lower from the previous outlook.

The NY Fed released its survey of consumer expectations for March. Results indicate a decline in median inflation expectations at both the one-year and the three-year ahead horizons. The median expected change in gasoline prices increased sharply. Median expected household spending growth declined, while expected household income growth rose slightly. Labor market expectations were mixed, with earnings growth expectations remaining stable while the mean perceived probability of losing a job and that of finding a job (if current job were lost) both increased slightly.

Our Fed is now stuck as it cannot increase the FF rate - taking a would-be safety net will likely be needed in the years to come. Japan with negative interest rates also not helping. The media is not about to make an issue of the failures until it is in the rear view mirror, and Wall Street will do the ostrich thing like it did with the mortgage market fiasco that about brought the world financial systems down.

In summary to all that has been said, floating this week has increased risks.  With that in mind, locking is never a bad idea - especially if you had previously held off in hopes that rates would improve.  The more aggressive approach would be to acknowledge that rates have been in a downtrend since at least mid-March, and resolve to lock when that trend ends.  The trade-off for the chance to lock at rates that are slightly lower than today's is that you might end up being forced to lock at rates that are slightly higher than today's.