Mortgage Rates Still Near 2017 Lows

Financial markets are still reeling from political headlines that first began circulating on Tuesday afternoon. I am still trying to get a handle on what has transpired even though we saw a rebound in stocks today.  I said it this morning that it will take a few days to assess how markets will actually take the investigation of Russia on our election, on any potential ties Trump and his team have with Russia. On the firing of Comey, the media is treating this as if it was the crime of the century, but no one actually knows how it all went down.

Stock indexes rebounded today, the 10yr note started lower in yield but as stock indexes turned positive the 10yr yield returned to unchanged and mortgage prices dropped. MBS market was volatile, so thinly traded that even a small sell order can move the prices momentarily. The U.S. Dollar Index rallied today as the greenback gained against all of the majors. Rates moved up a tad this afternoon, but we are still again near 2017 lows

Congress is beginning to hold hearings on tax cuts, bank regulations and increasing hearings on the Russian situation. Former Central Intelligence Agency Director John Brennan will appear before the U.S. House of Representatives Intelligence Committee on May 23, as part of its investigation of Russia and the 2016 U.S. election.  Brennan will appear in a session open to the public and press, followed by a closed session.

The reputation of Robert Mueller as special prosecutor was a great plus - he has no history of political bias, serving both Bush and Clinton as head of the FBI - the longest FBI director except for Hoover. Hope he will do his job and let the politicians do what they do whatever that may be. Trump is correct in one thing - the political divide is increasing every year and it does not seem it will narrow while he is president.

There are no economic data tomorrow but we do have James Bullard, St. Louis Fed and John Williams, SF Fed talking.

In summary, the volatility continues as this sort of development provides strong incentive for risk-tolerant borrowers to continue floating.  However, there is nothing wrong with locking in these gains.  The risks can be great if we do not get back these rates in the very near future.  One thing that I am seeing that there does not seem to be too much on the horizon that can change the current trend.    Since gains are from the DC drama, the next chapter appears to be Wednesday when Comey is supposed to testify to Congress.