Mortgage Rates Trending Lower

Mortgage rates are trending lower this morning, but really should not come as a surprise as we are still trying to calculate what the effects will be on the Friday news on the Brexit vote.  Last Friday we say a dramatic improvement, and are continuing to see that this morning.

There are three events that long bond traders will be focusing on this week, the Brexit fallout, Janet Yellen, and Manufacturing Data. The financial markets (currencies, bonds and stocks) will be in a state of "flux" for the near term with tremendous volatility from the Brexit fallout. But that is not so much to do with figuring out the future economic growth of Great Brittan. Instead its due to very real fear of what the fate is of the EU. I am now seeing reports of the following nations that want to have a referendum vote - France, Holland, Italy, Austria, Finland, Hungary, Portugal and Slovakia. Yellen has perfect timing as she will be speaking on a panel alongside the Bank of England Governor and the ECB President on Wednesday.

Manufacturing Data is back loaded towards the end of the week. Domestically, we have Chicago PMI and our ISM Manufacturing data. But we also get the Japanese Nikkei Manufacturing PMI and the Chinese Manufacturing and Non-Manufacturing (services PMI). 

The outlook for US interest rates still looks good as safety moves dominate now and likely will continue but we have to be focusing on volatile intraday swings after the huge rate declines over the last few days.  The 10yr is now trading near all-time lows, as it is 1.47% at 10:00AM, and MBSs with positive numbers. There are no answers, just a lot of questions that will continue to roil markets and likely to weaken the EU economies. Speculation running wild today and that will not lessen this week or next, or the week after that. This was not supposed to happen - markets were completely out of sync with the vote. The IMF waded in over the weekend saying the global economy will not be hit badly, but again, that is just a guess. In the EU however the economic hit will be much more severe.

The outlook for US interest rates still looks good as safety moves dominate now and likely will continue but we have to be focusing on volatile intraday swings after the huge rate declines over the last few days.

CONTINUE TO FLOAT – BUT KEEP ALERT AS PRICES CAN REVERSE.