Mortgage Rates Moved Lower Today - Was Trump Rally Too Strong?

Mortgage rates moved lower today as investors sought safe haven from global political risk in the bond market.  When investor demand for bonds increases, rates generally fall, all things being equal.  Today's improvement was fairly healthy, especially in light of no economic reports today. The 10yr moved fractionally below the long term uptrend line and is sitting right on its key 40 day average of 2.41%.

Markets slowly turning to the view I have been talking about, that the Trump rally was too strong and indexes climbed too high - given most of the underlying plans Trump has talked about are not likely to have economic impact until 2018.

It was not too long ago that markets were busting at the seams about Trump plans and the outlook for this year - sweeping corporate-tax reform, a rollback of regulations, and new fiscal stimulus. Now Trump is focused in immigration and has not said much about the economy while finding himself embroiled with judges over his shutdown of immigrants from seven Muslim countries.

And now analysts are re-thinking the euphoria that had driven stocks higher. Time to take a breath and look at reality other than hope.  Congress will not be able to move as fast as had been thought on healthcare, tax reforms or fiscal stimulus. The immigration issue has added more division between Republicans and Democrats, already at extremes. Goldman Sachs economists out today beginning to worry a little. Trump’s trade ideas also a major concern and could backfire, the longer financial and corporate markets ponder his trade re-dos the more concern is building. We would not be a seller of equities here or buyer of bonds, but we won’t buy stocks or sell bonds either. Very tight ranges - overall in the long term investors remain bullish equities and increasingly bearish about the path of interest rates.

Not much today as there was a lot of background chatting - Dodd/Frank, tax cuts, ACA, but nothing new. One of those days it is not easy for the media.

Not much movement in the stock or bond markets after the morning openings. The bond and mortgage markets have a well-defined trading pattern these days - opening one direction or the other then sitting quietly the rest of the session.

In summary, the bond market investors must be Patriot fans, as rates dropped and pricing improved today.  Benchmark 10yr bond yields dropped close to the bottom of recent ranges.  This looks/feels more like short term movement than a trend to lower rates, but whichever it is, we need this.  My suggestion is to be very cautious if you are going to float, but lock if you are getting close to your closing date.