Mortgage Rates Showing Some Improvement

Mortgage rates continue to inch lower this morning.  Even with the positive readings yesterday and thus far today, the banks are still reluctant to give back the full realization to what has transpired since the Fed announcement last week. 

There is a big concern on what is happening in France today following the debate between the candidates last night, and the perceived notion who won the debate.  A Harris Interactive poll on Tuesday showed that centrist Macron had been the most convincing candidate in Monday's first French TV presidential debate, adding weight to two other polls that reached a similar conclusion. The result, the euro climbed to six-week highs as traders pulled back from the concern that Le Pen would win and begun to take France out of the EU.

In the absence of any economic news, the stock indexes this morning was higher following Europe and the 10yr note opened on the positive side.  At 11:30AM, the +MBSs are again showing positive (+11BPS) and the 10yr is getting even a lower yield reading at 2.45%.

Q4 current account deficit was better than estimates.  The dollar getting hammered today on the positive outcome of the French debate.

No direct economic data again today. New York Fed President William Dudley made comments earlier this morning but he did not address the economic outlook or monetary policy. Kansas City Fed President Esther George and Cleveland Fed President Loretta Mester will speak later today but neither of the two votes on the committee this year and are both very hawkish.

No one looks at mid-size businesses as the focus is usually looked on large and small business - but mid-size businesses are seeing optimism increase. The optimism of mid-size businesses has increased recently to the highest in two years. In the first quarter, 71% of middle-market firms said they expect an increase in revenues, up from 55% last quarter, and 66% expect profits to improve, up from 55%, according to the RSM Middle Market Business Index, produced by the consulting firm RSM and the U.S. Chamber of Commerce.

Once again I do anticipate mortgage rates to stay in this range for a bit, if anything, showing small gains.  It will take something very unexpected to move mortgage rates significantly.