Mortgage Rates Stable

Mortgage rates eased just a bit more today marking the 4th day of relative stability after a sharp rise last Thursday.  Although there was a Fed announcement today, and although Fed announcements are typically capable of causing massive market movement, it was a relative non-event this time around.  Instead, the modestly positive interest rate environment came courtesy of ongoing uncertainty surrounding the presidential election.

There was not much of a surprise that the Fed left interest rates unchanged, as no one thought it would. The statement after the FOMC meeting was overall about the same as the prior one. A couple of fractional differences.  The prior statement said consumer spending was increasing, this time saying it is moderate, and the prior meeting there were three dissenters, this time just two. Eric Rosengren, Boston Fed, wanted an increase at the Oct/Sept meeting, but this time he went with the majority. There was not any significance to his change though. He still wants an increase but chose to keep a low profile.

There was little reaction to the statement, it was about unchanged from the last one and markets still believe a rate increase will come in Dec. Most of that depends on who becomes the next president; a Trump victory won’t sit well for the equity markets. A Clinton win although seen as better or markets, we don’t want to bet on it. Clinton is going to try to increase taxes, increase government spending and will most likely still face a credibility problem with all the revealed problems with her e-mails and the Clinton Foundation. Either way the election for the presidency goes, it is the make-up of Congress that carries a lot of weight.

More important economic data tomorrow with Weekly Claims, Q3 productively and unit labor costs, September factory orders and final durable goods orders, and October ISM services sector index. We have also seen seven days in a row the DJIA has declined, and that has not happened in five years. Friday is October employment data. Tuesday is THE ELECTIONS.

In summary, as expected, today's Fed statement contained no "November surprises", as the Fed Funds Rate held steady.  I am not convinced that the trend has broken, but we might have some cracks.  Seems the market is much more worried about a Trump victory over data or the Fed.  With the plethora of stories of a tightening Presidential race, I think floating till tomorrow might make sense, then make the call on locking before NFP report Friday AM.