Mortgage Rates Show Little Movement

Mortgage rates did not move much today.  That is not exactly what we want to see right now considering they are as high as they have been since the 2nd half of March.  This morning new home sales for March were a little weaker than expectations, and the report did not favor the first time home buyer of which is needed for our economy to grow.

With no meaningful motivation in terms of economic data or news, today's lack of mortgage rate movement is not too surprising.  Later this week, it will be very hard for rates to avoid motivation.  Tomorrow the FOMC meeting begins, as the entire focus for markets is the policy statement that will be released on Wednesday afternoon.  Even though they are not expected to hike rates at this meeting, many feel they will use the venue to telegraph the next rate hike.  Whether or not that happens, markets will likely react.  In other words, there is potential volatility ahead for mortgage rates.  Although volatility can take rates in either direction, the bigger risk at the moment is that the recent trend toward higher rates continues. 

Not only the FOMC meeting on Wednesday, the BofJ also is holding its meeting. Central banks took over the economic world in 2008, kept right on adding QEs and now negative interest rates in Europe and Japan. Our Fed is not there yet and may never get there unless the current more optimistic outlook for inflation and economic growth fails. Inflation in Europe and Japan teetering at zero and the raging debate here that inflation is increasing and central banks and Fed officials using whatever data is appropriate to support their views. Regardless of what you hear or read there is one, and only one constant - there is no history to rely on and central bankers and renown economists, not to mention traders and investors - have nothing to hang hats on and most is just speculation. Nevertheless, this is the world we have to deal with.

Crude oil today at the lowest level in four sessions. Report that the Saudis are thinking about more production to tap the China markets.

In summary, bonds were largely unchanged today, and are near late March levels.  I would love to think we are preparing for an imminent rally, but cannot say I believe that.  Too much "non-bad" economic news hitting, too little global fiscal discord.  My pricing has not suffered as much as bond movement would merit, time to get while the getting is good!  Right now the trend is to higher rates, so locking in, especially short term closes would be prudent.