Mortgage Rates Recovering Losses from Yesterday

Mortgage rates are moving lower so far today.  After yesterday downturn, it looks like this rollercoaster is going to be a wild ride as market volatility is moderate, but is still casting some concern on which way is the market going to go in the short term. 

Yesterday the stock market went up and the mortgage bonds followed in the opposite direction as is the customary move.  This morning, the stock indexes started lower and the reaction, as expected, is the mortgage bonds seeing better numbers and erasing the losses from yesterday.

MBA reported weekly mortgage applications this morning, and what was expected, the purchase apps were slightly up and refinances are heading even lower, back to the levels last seen in October 2008. Later we got the NAR report, which showed a robust February pending home sales number – doubling what was anticipated.

The failure to pass any legislation to replace ObamaCare, the first blow to the Trump bump stock market rally, is now pushed to the back of the queue replaced with the next significant promise - tax cuts. Like health care it will not be easy or quick. Republicans in disarray within the party, Democrats appreciating the lack of unity. You can take it to the bank - tax cuts will not happen anytime soon, possibly not this year.  

Nevertheless, investors will continue to pile into equities. Still looking for a correction before a new run higher but it won’t be deep and will not last long. Going to take a lot to swing investor sentiment around now but it did not help with the failure of the first Trump initiative.

At 11:00AM, we see the 10yr at 2.39% and MBSs a positive 22BPS. 

"The United Kingdom is leaving the European Union," Theresa May told lawmakers in the British parliament "This is an historic moment from which there can be no turning back." The outcome of the negotiations will shape the future of Britain's $2.6 trillion economy, the world's fifth biggest, and determine whether London can keep its place as one of the top two global financial centers. For the EU, already reeling from successive crises over debt and refugees, the loss of Britain is the biggest blow yet to 60 years of efforts to forge European unity in the wake of two devastating world wars.

With the Great Britain announcement behind us, I do not expect anything significant enough to push mortgage rates out of its existing channel.  Float if you like to gamble, but lock if you are closing in the next 15 days.