Mortgage Rates Do Not Have a Good Day

Mortgage rates did not have a good day.  However, one must put this into perspective as last week we hit the lows for 2017 – so if you look at this overall, the rates are a tad higher, but still relatively low just compared to last month’s rates.

Assessing the damage caused by Irma, insurance companies are not going to get hit as badly as was feared. Last week the stock market had a down week, but recovered all of the losses last week and then some. The risk now off with the natural disasters are off the table, but was surprising is that the equity markets had such a strong day and drove interest rates up as the 10yr went to 2.13% today.  The dollar gained strength on the relief rally taking gold down as risk has diminished. I have numerous friends in Florida and our headquarters is in Georgia - so far no one experienced any serious damages.  

It just was not the relief about damage in Florida and Texas – the markets were expecting another missile test from North Korea but it did not happen. Also today at the UN, the US watered down its push for deeper sanctions on North Korea, bending to the wishes of China and Russia.

Treasury sold $24B of 3yr notes this afternoon, with the demand weak and sloppy. Overall it was one of the weakest 3yr auctions in many months. Tomorrow it is the 10yr auction, more directly important to the mortgage rates. We will also get the July JOLTS job openings expected at 6.010M down from 6.163M in June.

If those who floated over the weekend, you took a hit.  You got slammed and should take your medicine for now. The best loss is the first one, keeping hope alive can lead to even greater losses. There are just two issues these days that are impacting financial markets - North Korea and the drive higher in stocks. North Korea threats are only cooling for the moment.  The country has momentum currently to continue pushing the US buttons after the UN sanctions have been reduced. The fear of more serious damages from Irma did not materialize, markets were expecting worse. Lessoned learned – do not try and anticipate a hurricane, its path, or its potential destruction. Every market that anticipated more damage has now reversed, gold, the dollar, the bond market, and the stock market.

In summary, with today's mini sell off in bonds, I think locking is the way to go.  Investors do not appear motivated to take bond prices any higher which would result in lower rates.   The trend still looks to be our friend, but we are pushing up against a ceiling that if broken could take yields higher quickly.