Mortgage Rates Barely Budged Today

Mortgage rates barely budged today, which was not too surprising considering today's bond market levels were roughly in line with yesterday's.  Movement has been minimal since October with day-over-day change most frequently occurring at the "cost" level.

Stock indexes were lower today as the bond and mortgage markets generally were unchanged on the session. October housing starts, and permits were much stronger than expected this morning. Hurricanes this summer still having influence on economic data, as the increase in housing starts due to the increase in new construction replacing the homes lost and heavily damaged - also the massive fires in California that wiped out many homes pushing starts higher.

Focus still mainly on the tax cuts. It is a given we will have cuts but not so much about how and who will receive the and will the corporate cuts actually help increase growth that is already getting better. Equity markets have mostly discounted the cuts in the rally that has moved the indexes higher over the last three months. The question for the moment in our eye is whether the equity markets have over-shot the tax benefits at present levels. I do not see much wage growth, and inflation remains nil at best.

Next Week’s Calendar - Thursday is a dead day (not just for those turkeys), Wednesday by noon the halls will begin to empty, and Friday is shop ‘til you drop’. The Senate is thought to be voting on its tax bill by Wednesday, but I doubt the vote will occur until the following week. No data on Monday. Tuesday October existing home sales. Wednesday October durable goods orders, Weekly jobless claims, and November consumer sentiment index from U. of Michigan.  We also have the release of the FOMC minutes from the meeting two weeks ago. Thursday closed. Friday stock and bond markets will close early. Next week should be quiet and uneventful even if the Senate does pass its version of taxes that for the most part is already a known by most.

In summary, with next week bringing the Thanksgiving holiday and with no possibility of significant tax reform news (congress is out until the following week), markets will be hard-pressed to find much motivation for movement.  The risky thing about these periods of lighter participation and lower conviction in financial markets is that they can result in unexpected and seemingly unjustified volatility.  Banks also tend to be less aggressive when it comes to offering better rates following bond market improvements.  With this, it generally decreases the benefits of floating in the near term.