Mortgage Rates Enjoying Latest Positive Trend

Mortgage rates moved lower today, even though very few banks offered much in regard to these improvements as we have seen the 10yr (the key to rates) improve to close at 2.24% after hitting 2.23% earlier this afternoon.  MBS pricing showed another positive day, but again, only by a very small amount.

There were no data points today. Both stocks and bonds now waiting for the FOMC meeting next Tuesday and Wednesday.

White House spokesman Sean Spicer resigned, ending a brief and turbulent tenure, amid further upheaval within President Donald Trump's inner circle. Wall Street financier Anthony Scaramucci stepped in as the top communications official.

Next Week, we get some key reports, some more housing data, consumer confidence, durable goods, and the Treasury will be auctioning 2yr, 5yr, and 7yr notes. Of course, the big news will center around the FOMC meeting which begins Tuesday.

Right now everything is looking positive, but I do expect little movement until after the play the Fed will make on Wednesday. Not sure how the FOMC will frame the lack of inflation - will Yellen and her Fed officials still talk that inflation and wage gains are ‘just around the corner’, will the Fed signal more details about beginning to run-off its balance sheet and add more emphasis toward anther rate hike in December? Likely the Fed will soft peddle because the last thing the Fed wants is to be directly blamed for any pull back in stocks or any weakness in the economic outlook. The Fed is hardly believable now so it boils down to how markets will assess the FOMC statement. In the meantime, expect traders long bonds to lighten up early next week. The Fed can cause high levels of volatility in the near term but these days investors and analysts do not have as much confidence in central banks as in historic times.

In summary, bonds posted decent gains today in the absence of any economic data, and pricing is now July's best.  Granted, this rally has not moved rates dramatically, but at least the trend may now be our friend.  Next week may bring some month-end bond demand.  Currently I am inclined to float short term for new loans, but lock if you are ready to close soon. As always, if happy with current terms, go ahead and lock and remove all risk.