Mortgage Rates See No Follow-thru to Yesterday's Gains

Mortgage rates are moving sideways thus far today after a nice price gain yesterday.  But what we have seen in the past is that there is no follow-through. The 10yr note yesterday declined to 2.29% but found resistance at 2.28%, but this morning we started at 2.30%, and is currently at 2.32% with MBSs slightly negative at 11:00AM.

June durable goods orders thought to be up 3.2%, increased 6.5%. This data will add to Q2 GDP, with the advance Q2 GDP being reported tomorrow, the first of three looks.

June US trade deficit expected at -$65.0B, was a little better at -$63.9B.

Weekly jobless claims were 244K, up 10K, the 4-week average at 244K. The prior week claims declined 13K.

Yesterday on the FOMC policy statement, the dollar took another hit.  The dollar index dropped 0.56 to 93.53. This morning, the dollar stronger but there is no change in the bearish dollar outlook, although technically, the dollar is oversold now.

At Noon, Treasury will auction $28B of 7yr notes.  The 2yr on Tuesday and yesterday’s 5yr both met with strong demand.

House Republicans now having their troubles with the budget for 2018. The August recess is coming tomorrow and still no consensus on the budget. The inability is just one more mess that continues in Washington and brings doubt that any tax cuts this year are unlikely. “Clearly, no budget, no tax reform,” said the House’s chief tax writer, Representative Kevin Brady, a Texas Republican. The budget is a key part of the process known as reconciliation, which Republicans want to use to enact a tax code revamp without Democratic support. The House and Senate previously approved a detail-free 2017 budget resolution that they intended to use to repeal the 2010 health-care law with only Republican votes. “The budget resolution is critical for tax reform. I don’t think there’s a workaround,” said Jonathan Taub, a tax specialist at Deloitte Tax LLP and former staff director for Ways and Means Committee Republicans. “It sounds like there are pretty strong battle lines now.”

Since we cannot get the 10yr to its critical pivot at 2.28%, I am a bit bearish right now. Nothing left in economic news that is likely to move mortgage rates today, so I am anticipating that it is a waiting game unless you are closing soon.