Mortgage Rates Steady - Lots of Data This Week

Mortgage rates opened unchanged this morning in the treasury and mortgage markets. There is no key data today, but this week the calendar has a number of significant data points. 

In the Senate, the Republican health care bill looks doomed: Republicans need 50 of 52 Republicans on board, but as of yesterday, they only have 49. GOP leaders going to release another version today in a last-ditch attempt to placate Senators from Maine and Alaska, Paul Ryan, KY and John McCain already in the “no” camp. Conservative Republican Senator Ted Cruz, speaking at an event in his home state of Texas, warned on Sunday that Trump and McConnell could not count on his vote. U.S. Senate Democratic leader Chuck Schumer dismissed the late effort to revise the bill and add money for a few states, calling it “just as bad for those states and the rest of the states because it still contains a massive cut to Medicaid.” 

Republicans cannot agree on almost anything.  Democrats will not support anything. But still, markets believe Congress can get a tax reform bill passed this year. Comments from politicians still keep the tax cuts dangling and markets lap it up as a done deal - hopefully, we still find it a steep hill. Democrats in campaign mode for 2018, Republicans a mixed bag of opinions and unable to rule.

This week has a number of key data points: new home sales, the final Q2 GDP data, durable goods orders, both consumer measurements and personal income and spending with the critical PCE included. North Korea still out there but not much said over the weekend. Treasury will borrow $88B in 2s, 5s and 7s. 

No change in the two factors that will impact US interest rates this week - the stock market and threats from North Korea. If interest rates have any chance to decline, it will come from either or both. Without a dynamic that pushes safe haven trades, the outlook for rates is a gradual increase.  

This week is data loaded, but stocks are not reacting much to economic data either positively or negatively. The technicals remain bearish for both MBSs and treasuries. Yellen speaks tomorrow. I am also keeping eyes on crude oil, now over $50.00 (Yellen and Draghi probably liking it as a talking point for inflation coming as Yellen has been saying since the beginning of the year.