Mortgage Rates Slightly Mixed Today

Mortgage rates were slightly mixed today, but remain in much better shape overall when compared to the last month of 2016.  In many ways, the new year marked a shifting of gears for rates.  It was very quiet in the bond and mortgage markets, as well as the equity markets were also not doing much. Looks like markets are going to drift into the Trump press conference tomorrow unless there is some over-riding data.

This morning the NFIB small business index was through the roof with optimism, the index the highest it has been since December 2004. Small businesses see less regulations, lower taxes, and better sales ahead, but employment in the report though was a little concerning. Small businesses still unwilling to increase wages and many in the survey were not yet willing to increase hiring.

After the election, with its explosive consequences for financial markets, bond traders were only thinking one thing - duck and cover!  In practice, this simply means that it was easy to convince bond traders to sell (which pushes rates higher) and nearly impossible to convince them to buy (which would help rates recover). 

Already some differences of opinion in the Trump plans to end ObamaCare immediately.  There is concern in Congress that until there is a workable replacement it is not a good idea to simply end it now. That is not going to be the only differences coming when Trump sits in the big chair - markets so far have bought into the idea that unlike any history Trump can walk on water with Congress. It will not be as swift and easy to implement most of his plans for tax cuts, de-regulation, fiscal spending, and those re-negotiations of trade policies. Then, once he warms the big chair there are those annoying geo-political issues.

In summary, bonds were largely unchanged for the bulk of the day.  Given today's lack of data, a flat market is not surprising.  Tomorrow's 10yr treasury auction may inspire some movement, but until then we are treading water.  If you have decided to float, there may not be much movement for improvement, but it could happen as we have seen those who decided to do such in the last thirty days.  If you are locked, relax, and enjoy the ride.