Mortgage Rates Showing Little Movement

Mortgage rates are moving sideways so far today.  Yesterday we saw a great deal of improvement in the MBS markets which have brought our rates to another low point seen a few times in 2017 thus far.  At 11:00AM, we have very little movement in the MBS and 10yr Treasury, even though I am happy to say it is at 2.29%.

This morning we got a nice jump in Weekly Mortgage Applications as it is attributable to that time of the year where we see more purchases begin to occur.  The only data today of significance was the March import and export prices which came in basically on target.

Geo-political events still dominate which is why the 10yr is breaking a little of its technical resistance. The Fed still talking about two more increases in the Fed funds totaling 0.50% increase and rumbling about beginning to reduce its $4.2 trillion balance sheet. Comments from Dallas Federal Reserve Bank President Robert Kaplan will be scoured for clues on interest rate hikes and the Fed's plans to trim its balance sheet. There is also the over-done stock market at these present levels. The Trump rally has stalled as investors have come to the realization that all of the Trump campaign promises will require a lot more time to move through Congress and even then, unlikely to be as market-supportive as most assumed over the last four months.

Presently global tensions are running at high levels; we have been here before many times in the last 10 years but at the end of the day issues tend to cool down. North Korea’s threat to launch a nuclear attack the US is not possible, just an empty threat but enough to keep investors in haven treasuries - that is also driven by the stock market showing it has momentarily run out of momentum. China is not about to let North Korea get too far out of hand. The US is sending a Navy strike force as a show of strength but no one expects any actual military action. In Syria with Russia, a lot of posturing but at the end of the day we don’t expect any more US missiles to be launched.

At Noon, the Treasury will sell $12B of 30s re-opening the bond issued in February. Yesterday’s 10yr auction was soft based on comparisons of previous auctions.

There is little left today.  No more data and Dallas Fed Kaplan is not likely to light any fires. We are approaching the Easter holiday with markets closed on Friday. I cannot stress it too hard, the 10yr note, driver for MBS prices, is at a very crucial technical level now at the 2.30% area.