Mortgage Rates Are Not Moving Much Today
Mortgage rates are sideways today after what has been
a slow reversal in the rate markets in the last week. So far today, the bond market and the 10yr
have not moved much (if any) with the US stock indexes slightly lower after two
days of strong buying. There are no key data point today, but early this
morning, as usual, we got the weekly mortgage applications from MBA. Overall
apps increased 2.7%, but it was all in refinances, as purchase apps were down.
Today Trump is going to release his framework for tax
cuts, focusing on businesses and corporate cuts that have been touted as huge
cuts for small businesses. Personal tax cuts are not likely to be completed
anytime soon, maybe not until the end of the year at the earliest. The
corporate cuts are thought to reduce income to the government by $2.2 trillion
over ten years. Everyone champions tax cuts but there is a limit if deficits
are to be considered. There are too many in Congress, Republicans and Democrats
that will resist the Trump’s tax cuts. Tax plans will be a significant debate
through the rest of this year, as most do not expect any actual legislation
until later this year. Tax cuts and tax revisions are complex, as this will
require a lot of time and disagreements in the political world.
The government is set to shut down if the present debt
limit is not extended. Trump withdrew his demand for money to build The Wall,
making it easier for Congress to temporarily increase the debt limit and keep
the government functioning. This will likely get done without government
closures. The biggest lingering question now is whether the spending bill,
which is needed to keep the government running after its current funding
expires at 12:01 a.m. Saturday, will include payments established by the
Affordable Care Act to help insurers offset the cost of subsidies for
low-income customers.
Tomorrow the European Central Bank will meet. Europe’s economies are improving allowing the
ECB to begin withdrawal from their stimulus package as the US Fed is doing,
with the talk of two more rate increases for the Federal Funds rate this year.
In that regard, while the Fed continues to talk about it, it is still unclear
and is dependent on US growth through the rest of this year. Most Fed officials
end their remarks about increasing rates with the comment that it is ‘data
dependent.
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