Mortgage Rates Unchanged

Mortgage rates have not moved too much in the past few days. The bond and mortgage markets opened a little lower in price this morning with US stock indexes slightly better. But since then, we have already seen ups and down and I feel like we are seeing the roller coaster effect today with it up, then down, then up again.  Of course, we have seen the correlation with the bonds and securities as well in opposite directions.  This last spike has not yet affect them as bad, but at 10:30AM, we are even with the 10yr at 1.75% and MBSs are up 9BPS. 

Early this morning we had the March import prices, which came in a little lower than anticipated, but the March export prices were better than expected.  Overall, not much of a difference as we have seen no change in pricing as the index does not grab headlines but small businesses account for most jobs in the US, the decline adds to the view the economy is still slow.

More Fedspeak today and unless something is noteworthy, whatever is stated by them is usually one man’s opinion, and every one of us has one.

The IMF warned today that the world may fall into stagnation because of slow growth is more exposed to negative shocks. The IMF cut its world growth (again) - weak exports and declining investments put a pall over the US. The consumption tax in Japan is hampering growth there.  Central bankers and finance ministers will have a lot to talk about this weekend when the IMF and World Bank meet in Washington this weekend.

The US stock market has been weakening recently, the last few sessions the indexes were not able to hold early morning gains and weakened in the afternoons. The pen today is low and increases the possibility of another decline today in the indexes. The IMF cuts to growth, what appears to be a very weak GDP in Q1, valuations generally too high, and the earning season starting, all dragging against investor sentiment. Most stock analysts I read are sanguine about quarterly earnings.

At Noon, the Treasury will begin three days of borrowing with $24B of 3yr notes. Tomorrow its $20B of 10yr notes and Thursday $12B of 30yr bonds, the auctions may keep longer dated bonds in check with interest rates at these very low levels.

Crude oil this morning is increasing again, now solidly over $40.00 at $41.80. Today the dollar is stronger against the yen and euro currency - it has been a one way street lower for the dollar the last few weeks.

As you know I have been floating for a few weeks. Now after the 10yr has found technical resistance at 1.70% and after the 10yr has dropped 25BPS in the last three weeks and mortgage rates down, there is more than like some retracement down the road. Tomorrow and through the rest of this week traders will face a number of key data points (retail sales, PPI, CPI, industrial production and factory use) the recent rally may stall. Floating is now becoming more of a risk since we are at the resistant levels again.  Anything can happen so stay close to the news as I continue to recommend floating - but any additional weakness and more than likely I will start locking more of my customers.