Mortgage Rates Trying to Move Lower

Mortgage rates are trying to move lower today, but the way the banks are coming out with their pricing today, you would not suspect that happening.  Weekly jobless claims were better than forecast.  Claims, after increasing because of hurricanes, are now coming back to levels before Harvey and Irma. There are still some issues with claims from Puerto Rico that likely will increase once the data is available. The island almost wiped out - claims from there are being estimated. Overall claims are reflecting the strong job market.

Today’s September PPI came in very inflationary, but currently it is not impacting the pricing – but the CPI reading could make some waves. Markets (stocks and bonds) appeared to ignore the increase, with the Fed now questioning its own inflation forecasts.

With the little reaction to the higher PPI and better claims, the 10yr at 10:00AM is at 233% with MBSs in positive territory again. It will all come down to the CPI data which is a better look at inflation.

The IMF begins its meeting today. Today starts the earning season - banks reporting today. JP Morgan Chase reported better than expected earnings, Citi reported better than they forecast three weeks ago. Banks are seeing declines in trading profits, but cost cuts and asset sales holding earnings well.

This afternoon, Treasury will auction $12B of 30yr re-opening the issue in August. Yesterday, the 10yr auction was OK with reasonable bidding.

Yesterday, the minutes from the September FOMC meeting revealed that within the Fed there is an increasing concern that ‘maybe’ the inflation outlook that Yellen has continually said is coming may not be coming. A new wrinkle, given the Fed and most all other central bankers, have been preaching increasing inflation for well over a year now.

IMF not getting on board with the US tax cuts being outlined. It has been claimed the cuts will increase growth to over 3.0%. IMF more concerned that the proposed cuts, if passed, will increase US debt as deficit spending is a reality regardless of those that believe the cuts to be revenue neutral and doubt that it will increase US growth as anticipated.

Unless something drastically changes today, I do not anticipate anything will move where we stand today on rates – basically the same as it has been since the beginning of last week.