Mortgage Rates Not Moving Much Today

Mortgage rates are not moving much today as there is no driving news today other than what may slip out of Washington. With no economic data, the bond market continues its slow rate declines.  At 11:00AM, the 10yr is currently at 2.24% and MBS pricing is in positive territory. 

There is not much to report today as the dollar’s decline and the euro currency increase is finally worrying the European markets that with the increasing strength of the euro it may harm the outlook for growth. The dollar getting blasted for many reasons, one is the concerns about Trump and his relationships with Russia, his comments trying to fire his appointed special prosecutor considering the Russia stuff. The complete failure of the Republican Congress to show any leadership and unable to get anything accomplished, and the outlook continues to be increasingly negative for most of Trump’s campaign promises. Tax cuts, infrastructure spending, building the Wall - all in question now.

Meantime the US equity markets continue to climb.  The bullish rationale, stronger growth expected, corporate earnings remain strong. Next week the FOMC on Tuesday and Wednesday - the policy statement at the conclusion always important but this one will be high on the list of importance. Yellen thinks the lack of inflation is ‘transitory’ with no definition of the word; yesterday the Bank of Japan lowered its forecast for inflation over the next two years, yesterday the ECB did not do anything about possibly beginning to taper and increase rates above 0.0%. Here in the US our Fed may be enamored with the record setting stock indexes but inflation is nowhere on the radar and it is very likely there won’t be. On higher wages because of the low unemployment rate, possible increases but in this fundamentally weak economy wage increases are not likely to be much and most if at all will be in the low-income sector and that is not likely to feed much improvement in the economic outlook.

Talk increasing among the bulls.  Economic growth to increase to 3.0% - have to believe that if you are an equity market bull, otherwise there is no reason to keep investing in stocks with present valuations at historic high levels.

It still looks bullish for treasuries and to a lesser degree mortgage rates. With FOMC next week, it is unlikely there will be any major moves between now and next Wednesday when the policy statement will be released.  There will be no Yellen press conference after the meeting and no change in rates expected.

It is Friday, and unless you are about to close, cautiously float and stay close to the markets.