Mortgage Rates Moved Higher as 10yr is at 2.39%

Mortgage rates moved higher today following a little bit of movement in both the MBS markets and the 10yr Treasury as it stands now at 2.39%.  I stated this morning that I did not see that much of a change in the rates as we saw already this morning, even with the robust reports that came out today.  Strong economic data typically leads investors to sell bonds, which in turn results in lower bond prices and higher rates.

More and more we are seeing that the March Fed rate increase is at 40% probability and has been increasing recently from 13% a week ago - it has to get above 50%, preferably 60% to ease the Fed’s conscience and trigger an increase.  

Tax cut anticipation has been one of the keystones will not likely be an easy path.  Sen Hatch and Representative Paul Ryan, House Speaker today saying a tax plan will not be easy or quick. Recall I noted many of the driving forces behind this recent stock market explosion will not likely happen in the first 100 or 200 days; and more than likely not to the magnitude Trump is calling for. On a more cooperative note, there appears to be more agreement on the order tax between the administration and House speaker Ryan but the amount will be debated between Congress and Trump’s 20% goal.  

Tomorrow morning markets will trade on the digestion from Trump’s speech tonight.  Investors are curious to hear what President Trump has to say at his "address of the joint session" tonight.  This has the potential to kick off the next wave of momentum in rates - either back toward the higher end of 2017's range or down into new lows for the year.  Given that we're already fairly close to recent lows, it's a good time to lock for folks who do not want to risk losing any money.  Risk-takers would be justified in waiting to lock as long as they are OK with locking at a loss tomorrow if things do not go their way.

In summary, with bond yields near recent lows, today may have been a good day to lock. Tonight’s Presidential Address to Congress has the potential to move rates one way or the other.  Since this happens tonight, you will not have a chance to lock before any bad news for rates.  Even if we get good news for rates, I am not sure we have much more room to improve so the risk outweighs the potential reward.