Mortgage Rates "On Pause" Today

Mortgage rates are moving sideways so far today.  The bond market is basically "on pause" until we get some traction on keeping the government open past Saturday. We have a mixed bag of economic data today.

We got the first glimpse at the first quarter Gross Domestic Product, and it was a very mixed bag. If you look at the headline GDP reading it fell short of expectations (0.7% vs 1.1%), but the Prices Paid PPI and the Employment Cost Index was higher than anticipated. So, by every metric other than the headline reading, this was stronger than expected as far as inflation/wages. Historically, the final reading is always higher than the preliminary reading, so it is very probable that when the smoke clears that this reading is back closer to 1.0%.

Chicago PMI April reading was much higher than expected - the highest reading since January 2015. Consumer Sentiment final reading for April (mid-month reading was 98) came in at 97, which was the second-best reading of the year and very solid.

Market fears are dissipating quickly now with geopolitical tensions relaxing presently. The stock market has done well this week. The VIX index, the measurement of market volatility, has dropped to a three year low yesterday. Low volatility is one buy signal for equity market investor and a slight drag on fixed income investments that usually benefit when volatility increases.

Presently investors and traders are enamored with the Trump tax plan blueprint released Wednesday. As time moves forward, it should become clear that those tax cuts will not likely be easy or quick to move through Congress. Technically the models and other price action indicators are mostly neutral - not bullish but not bearish either.