Mortgage Rates Sideways Before Trump's Speech

Mortgage rates are moving sideways so far this morning as we have seen very little movement with the 10yr, at 2.38% as of 11:00AM, and the MBS slowly increasing to a positive 21BPS.  With this improvement, we might see some positive reactions to the rate market, but only in terms of the monies charged for those specific rates, not the rates themselves.

This morning we did get Weekly Mortgage Applications which did increase, but was to be expected after the holiday lull we had experience.  The Treasury auction from yesterday produced a solid 3yr note.  Today, we get the closely watched 10yr note. Tomorrow’s 30yr bond auction is more important to mortgage rates.

Richmond Fed President Jeff Lacker announced his early retirement. He will be leaving in October of 2017. He does not have a vote in 2017 but was scheduled to be a voting member in 2018. New York Fed President William Dudley will speak at early this afternoon.

The three main contenders to replace Yellen appear to be (for now) John Taylor, Glenn Hubbard and Kevan Warsh. Of the three, John Taylor is the creator of the famous "Taylor Rule" in 1992 and has effectively replaced the "Phillips Curve" by most analysts as the best tool. But if we applied the "Taylor Rule" today (which the Fed has not), it would put today's Fed fund rate at 2.99%.

Today starts the confirmation hearings for Secretary of State. Donald Trump is concluding his news conference as I type this report, and it has been interesting to watch the markets with all that he is saying. Mortgage rates could see volatility through the day as markets digests comments from President-elect Trump.

The rest of the day will be based upon the Treasury auction at Noon, and any reaction forthcoming on what President-Elect Trump is talking about.  If you are closing in the next 15 days, go ahead and lock.  If not, stay tune to the market and see what the future brings up.