Mortgage Rates Approaching 2017 Lows

Mortgage rates moved lower today as we are now hitting the lowest rates we have seen since early January.  We have been here at this point now three times as we hit near these lows in late February, and for a little while last week.

The only data today, the March NFIB small business optimism index that declined a tad, but still a high number.  It was not a big move, but was lower than February.  The 10yr auction was not well received this afternoon, which pushed the 10yr up after the announcement, but that did not last long as the yield is back down to the resistant area of 2.30%. 

Since the wild Trump rally began in November, not many looked around, just kept buying sending the DJIA up over 3,000 point and the S&P 500 index up 311 points. Now since Mid-March investors are waking up that the Trump rally may be built on sand. Go back to what I said in January – as I noted then that those Trump promises of lower taxes, repeal and re-place ObamaCare, fiscal spending, order taxes, the Wall, re-doing Dodd/Frank have not happened. In fact, if the Republicans had not ended filibusters for Supreme Court nominations the Trump agenda would be batting zero. To get the Supreme Court vote has now fully opened the can of beans that was originally started by Harry Reid, Democratic majority leader back in the day.

Geo-political issues in the meantime have moved a little higher on the risk scale.  Russia, believe it or not, is now asking the UN for a hearing on the gas attack, claiming the US is making it all up. North Korea warned of a nuclear attack on the United States if provoked as a U.S. Navy strike group moved toward the western Pacific. Time to take that country seriously and if China cannot leash it then we should before it really escalates. Now it is just words while they continue working on a missile that has the range to reach the US. Combine all of the issues - the Trump fake, Syria and North Korea and investors are increasingly worried that they may have a rough road ahead. Geo-political issues however are quick to boil then fade away as quickly.  

In summary, bonds rallied again today, as saber rattling and a stock sell-off provided bond buyers ample motivation.  It's safe to say we are either in a holding pattern or on the verge of a rally.  There is certainly no motivation to lock early unless you are ready to close soon.  I am slowly changing my opinion as I would like to see where this market goes short term.