Mortgage Rates Trending Sideways This Morning

Mortgage rates are trending sideways as it has been a quiet morning thus far, with minor price improvements from Friday, but nothing significant. The news over the weekend on Trump’s Europe meetings billed as G-20, but Trump spent most of his time on one on one meetings with various global leaders, including Putin. Other news had John McCain out over the weekend saying the health care potential legislation is “dead.” Republicans divided and not able to get the 51 votes needed to move it forward. Looks increasingly like there will be no new health care this year and that the ACA will continue as is, letting it expire before a new approach. No matter what occurs, the national health care is not going to satisfy many.

Key economic data this week will not hit until Thursday and Friday. In the meantime, Janet Yellen’s testimony on Wednesday and Thursday will get all the focus. How she responds to questions about the lack of wage growth and slow economic growth is critical. U.S. job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite sluggish wage gains.

Treasury will begin this week’s auctions tomorrow with a 3yr note, Wednesday a 10yr and Thursday a 30yr auctions. The 10 and 30 will be re-opened from issues in May. The demand for the 10 and 30 will be key for the MBS markets.

Starting the week with no changes in bonds and stocks. Markets are waiting for Yellen on Wednesday and Thursday. The Trump trip is getting media attention, but there isn’t any substance to what he said, his “America First” meaning nothing that happened or did not happen had any market impact.

I expect mortgage rates to trade in a narrow range until Wednesday when Janet Yellen gives her testimony in front of the Senate. For the rest of the week we could see some mortgage rate volatility, particularly when you throw in CPI numbers on Friday.