Mortgage Rates Steady - Best in the Last Three Weeks

Mortgage rates held relatively steady today as they are currently at their lowest level in the past three weeks.  The dollar keeps declining, and the stock market continues to hold well although not much movement today.

The BofJ at its meeting lowered its inflation forecasts for 2018 and 2019, for March 2018 from 1.4% to 1.1% and March 2019 from 1.7% to 1.5%. US dollar diving, inflation diving, but US and global stocks increasing. A very unusual set of circumstances. US interest rates calm, not declining or increasing.

Next week the FOMC meets on Tuesday and Wednesday. The statement is key as usual but more so this go around. The other key central banks have decided not to remove QEs and negative rates while the Fed continues its strong view that the US economy will improve and inflation will increase as wages increase. Stubborn thinking or intuitive?

No data tomorrow.  

Sen. John McCain as you know by now, has brain cancer. Whether he returns to the Senate is a huge question now. The type of cancer he has is said to be difficult to treat. McCain, a Republican but willing to stand up for his beliefs is well respected by Democrats and Republicans alike.

Not sure what will become with the health care Senate bill. Trump waded in, finally. McConnell said the Senate would hold a vote on the bill next week. Ryan saying Republicans are more unified on health care than the votes suggest.  

The relatively calm reaction in bond markets (and the absence of changes in lender rate sheets) suggests traders were already in position for this event and may be increasingly tuned out until next week.  For now, the short-term trend is positive, but we haven't been able to improve much past current levels.  Risk-averse borrowers should increasingly consider locking while risk-tolerant borrowers should simply remain on-guard for a reversal next week. 

In summary, bond markets weathered both ECB and BOJ policy statements, as neither central banks' commentary indicated imminent tapering concerns.  It is increasingly apparent that tax reform (and the implied economic growth from it) will not happen this year, another bond friendly development.  Next week may bring some end of month demand, and improved pricing.  Right now, unless you are ready to close, float with caution.