Mortgage Rates at Lowest point in Nearly 30 Days

Talk about a wild opening to the new year - I had mentioned volatility will be at high levels at the start of 2017, and we did not take long to see it in action.  Today was quite a wild ride as the DJIA opened +140, the 10yr yield in early trading at 2.52%, and MBSs down 32BPS.  Crude this morning was up $1.17. The dollar was roaring higher. Not so slowly the interest rate markets gave back almost all the losses and the 10yr note yield backed down to unchanged erasing the large increase.

Crude oil ruled the day and the Trump rally, in my view, has over-run reality for the moment. Trump continued his Twitter comments today, coming down on GM and Ford (Ford buckled and scraped its Mexico plans) and other companies that have moved away some of their business. Media getting anxious that Trump has not held a press conference since his election, but as Rick Santelli pointed out, who needs a press conference with Tweeting - reporters do not get to question. Crude oil started the day up $1.17 to start and now -$1.48, as stocks and bonds are led by oil these sessions with OPEC on watch for cheating.

Mortgage rates improved slightly to begin 2017, bringing them to the lowest levels in nearly a month, on average.  December 8th was the last time rates were lower.  Intraday volatility was the hallmark today. The DJIA started +140, dropped to +25, then in the last 30 minutes the index made another move higher but ended the day down from the open. As stock indexes fell interest rates also fell and prices improved. Between now and when Trump moves into the Oval Office we should expect increases in volatility - and not likely to settle much even after he gets there. Investors and traders are betting on swift miracles these days.

In summary, Bond markets posted gains through mid-day today, despite solid ISM data and no "end of month" demand (as compared with last week).  The action is encouraging, hopefully indicating we have hit a short-term ceiling for rates.  It is certainly too early to pronounce an end to rising rates though, but at least pricing is improving.  I am now leaning to float before locking now as these gains have resulted in better pricing – but do watch your risk tolerance.