Mortgage Rates Better Before Jobs Report

Mortgage rates moved just slightly lower today, as it was another decent day in the bond and mortgage markets.  Stocks were somewhat quiet but the DJIA inched higher. The 10yr note declined to 2.22% and is now coming to critical points.  With this, the rates are again at the best levels in over a month.  While that sounds somewhat impressive, day-over-day movement has been very small and the overall range has been very narrow during that time. 

The WSJ today in an article outlined five reasons the stock market continues to improve.

·        Stocks Reflect the Resurgent Health of American Corporations

·        The Global Outlook Is Looking Brighter

·        The U.S. Economy Is in a ‘Goldilocks’ Situation

·        Passive Funds Are Propping Up Prices

·        There Is No Alternative

·        Ka Sara Sara

With all the above the bond market continues to improve taking mortgage prices higher.

The news today - Robert Mueller, special prosecutor appointed by Trump to look into Russia’s interference in the 2016 elections, announced he is impaneling a grand jury to look into it.  That hit the wires at 3:40 this afternoon and added more to the bond and mortgage markets. Here comes the tweets.

Tomorrow brings the important Employment Situation (the big jobs report, aka "nonfarm payrolls"), which always has the potential to cause volatility for rates.  In the current environment, the markets that underlie rates have been relatively less focused on labor market data and more interested in inflation metrics (because that's what the Fed is most interested in). It is highly unusual that I am suggesting floating into this report, even with the nice gains that we have seen in the last few days.

In summary, more minor gains in bond markets today, as our consolidation continued.  There is still no trend here, treasury yields are seemingly cemented in place.  Small pricing improvements are nice for floating borrowers, but can evaporate as quickly as they appear.  Feels like expectations are low for tomorrow's jobs report, and a strong report might hurt bonds more than expected.  Float with eyes wide open.