Mortgage Rates Continue to Show Little Movement

Would you be surprised if I reported that we had another day where there was very little movement in the bond market?  Weeks like this are the reason that some mortgage rate analysis are done once a week. There have not been any significant developments in financial markets - at least not as far as bonds have been concerned.  And there certainly has not been any significant movement in mortgage rates themselves.  In fact, with the exception of a modest dip last Wednesday, mortgage rates have been essentially flat for the entire month of June.

It was interesting to read today when Loretta Mester, Cleveland Fed and one of the hawks at the Fed, said today that recent inflation weakness was likely temporary and it should not delay another interest-rate hike this year, even though there is no "immediate need" to tighten policy. Recent inflation measurements have been soft and there has been a few trial balloons in markets that maybe the Fed will wait longer to increase the FF rate.

This week is one I do not like but overall it is a relief that there was nothing of substance that had any impact on markets. I do not like it because it is like hide and seek looking for any possible market interesting news. Boring. I always think I should have something of interest to talk about but not the case this week. May existing and new home sales, the only economic reports and both beat expectations.

Next week a little more economic data than this one but still markets are likely to keep in their tight ranges, at least based on economic data. Treasury will auction 2s, 5s and 7s next week (Monday through Wednesday). The EU/Brexit talks have not yet concerned markets but needs to be monitored. The dollar is in play, the weakness recently has been a major support for the US asset markets particularly the bond market. A trend to a stronger dollar will remove an incentive for foreign investors.

In summary, with the 10yr at 2.15%, everything still points to the bullish side.  However, but with that said, do not get too cheery.  Potential home buyers that are essentially floating and not locking should be warned that most continue to believe rates will increase. We are not yet in that camp but as I said, I am cautious as I do not want to cause anyone to pay any more than they have to.

Next week there will not be any report on Monday or Tuesday, as I will be traveling to Virginia to assist with my Navy son coming home before he is deployed overseas for the third time in 26 months.  This time it will be for an extended time and do not really want to leave his car and belongings in storage.  Till then, watch the 10yr and proceed with caution.