Mortgage Rates Surprisingly Flat

Mortgage rates are moving sideways so far today which is surprising on what transpired yesterday with the selling in the stock market, and the significant drop in interest rates rattled a lot of cages. The DJIA down a relatively skimpy 1.78% but listening and watching the news you would think the market lost 10%. The 10yr, from a technical perspective, broke a key resistance level at 2.32%. I also commented yesterday that many do not believe yesterday’s selling of equities is sustainable and it is not the extended sell-off we are expecting toward the end of this year. At 11:00AM, MBSs are up and down and the 10yr is holding its own at 2.12%, while the stock indexes are flat.

The weekly claims data continues to show almost no labor slack and full employment. Initial Weekly Jobless claims were lower than expected and the more closely watched 4-week moving average fell to 240,750 which is crazy-low. Continuing Claims came in at 1.898M which is a 44-year low!

The Philly Fed Manufacturing and Business Outlook Survey crushed market expectations with a very robust 38.8 vs est. of 19.5. The May reading is the third highest reading since 2011!

Mortgage rates have fallen to the lower part of the channel that we have seen developed since the end of last year. When this happens, increased volatility is likely. While there’s no scheduled news left for the day, political news can quickly swing the markets and mortgage rates as we experienced yesterday.

Until more time passes, a few days or a week, let’s call yesterday’s movements in the stock and bond markets here and globally a spasm and not the beginning of a new trend. Admittedly it cannot be accurately assessed until we see what will happen regarding follow-through.