Mortgages Move Up and Out of Range

After an abrupt increase yesterday, mortgage rates shot higher again today, bringing them even further into the worst territory of the month.  In fact, apart from December 14th through 28th, today's rates are the highest in more than 2 years.  Whether this is as dramatic as it sounds depends on your perspective.  While it's true that rates are at 2017 highs, the range has been fairly narrow so far this year. 

This morning and the economic data the mortgage market sat quietly. The 10yr note yield increased to 2.50% before ending at 2.47%. Housing starts were better than thought but much of the 11% increase was due to multi-family. The Jan Philly Fed business jumped higher than the December figure, but also much stronger than that was expected. Weekly claims were expected to have increased but declined.  All this started with the December CPI increase from yesterday.

Tomorrow there is no data as all attention will be on Trump’s inauguration speech. Normally the inauguration speech is full of hyperbola and feel good comments. Not a political speech but this is Donald Trump, no one has ever experienced this before. The likelihood is a good speech and less bravado but if he goes off script it may have a market impact on stocks. The short term technicals turned yesterday and now in a bearish pattern.

In summary, our recent range has been officially busted.  Hopefully you were able to lock in yesterday prior to the carnage in the bond market.  What to do now?   For those who failed to stay defensive while in the range, bad news, the range has been broken.  That's not to say that we won't find ourselves back in the range, or that rates are only going higher, but unfortunately now the pattern of momentum driving rates lower has evaporated.  Because the uncertainty surrounding our new administration is so high, combined with the rhetoric of the FED leaning towards rate increases, the argument to not lock-in and wait it out becomes very weak.  There are some rare instances that floating is a viable option, but for most, the smart thing to do is lock in and move on.