Mortgage Rates Moving Higher So Far Today

Mortgage rates are moving higher so far today.  Prior to the data this morning, the mortgage bonds started off on the negative side continuing where it left off from yesterday’s close.  The 10yr also opened at 2.44% and is increasing in yield.  Currently at 11:00AM, the MBS are down 16BPS and the 10yr is at 2.48%.

Inflation concerns were resurrected yesterday and moved to the front of the line after Dec CPI yr/yr overall increased to 2.1% from 1.7% in Nov and comments yesterday afternoon from Yellen commenting that the Fed is concerned and doesn’t want inflation to escalate to pull the economy back into recession. She reminded that if the Fed were to fall behind in checking inflation the outcome would be faster increases and a weakened economy.

Housing came out with a mixed bag with their readings, but overall solid. New Housing Starts were a smidge better than expected and Building Permits were a smidge lower than expected.  Initial Weekly Jobless Claims were much lower than expected plus, the more closely watched 4 week moving average dropped to 246,750 which is extremely low. Continuing Claims fell to 2.046M which was also better (lower) than the market expectations of 2.073M. The Philly Fed Business Outlook Survey was hot, hitting 23.6 which far outpaced the consensus estimates of 15.3 and was the highest (best) reading since December 2014.

Today Trump's pick for Treasury Secretary will enjoy a grilling from Dems on the Senate Committee.

The European Central Bank left their key interest rate unchanged at 0.0% and their deposit rate at a minus 0.4%. They also announced that their Non-Tapering Taper will continue as previously announced. During his live press conference, President Mario Draghi tried to down play inflationary concerns and said that the economic path has "firmed" but refused to discuss future ECB plans during questioning. Basically, there was nothing new from the last ECB meeting.

Mortgage rates both yesterday and today have been a bit unexpectedly volatile. Markets continue to see strength in the economy and real estate and that is helping to push mortgage rates slightly higher. Nothing else today as tomorrow the inauguration.  The Trump rally likely to reignite now with tax cuts driving the positive economic forecasts. Most expect wages to increase leading the Fed to move again at its March meeting. Technicals are turning bearish now.