Mortgage Rates Steady - 10yr at Key Resistant Level

Mortgage rates are trending sideways this morning.  Stock and bond markets opened quietly this morning. The 10yr note yield has dropped to 2.32% and trading at its near-term technical resistance. At mid-day, there really is not anything moving to be worried or excited about.

Last week was a big week for key economic releases, with the Republicans revealing the tax cut details and the FOMC meeting. This week, very little data to look at, as the headline is the quarterly refunding from Treasury, issuing new 3yr, 10yr and 30yr notes and bonds on Tuesday, Wednesday, and Thursday respectively. House Republicans last week unveiled the first draft of a 429-page tax bill that, if enacted, would be the biggest overhaul of the U.S. tax system since the 1980s. The idea is still to pass the bill in the House by Thanksgiving.

Wm. Dudley, NY Fed Pres and the most important regional Fed President announced he will resign in mid-2018 before his term ends in 2019. The NY Fed President is a permanent member of the FOMC and a hawk towards higher rates. Next year, the Fed will be difficult to handicap with a new Chair, a new NY Pres. and three other Fed governor seats that have been vacant for about two years. He recently commented that stopping rate increases at this point could be dangerous for the economy. His stance echoes that of other senior central bankers who worry that with the jobless rate near levels seen as natural in a properly-functioning economy, there is a rising risk of inflation overshoots.

In Saudi Arabia, a purge of the elite, an anti-corruption that is just beginning with the new Crown Prince moving to consolidate his power. Dozens of princes, ministers, and prominent businessmen have reportedly been arrested as part of the purge, including billionaire investor Prince Alwaleed bin Talal, one of the world’s richest men and a significant investor in Twitter, Citigroup and many other international companies, people aware of the matter said. The direct US result for consumers, higher oil prices, as we are seeing crude at a 2-year high this morning.

This morning at 11:00AM, after a nice rally in the 10yr and MBS prices last week, the 10yr is at another key resistance level at 2.32%. The 10yr yield now under its 20-day average and at its 40-day average this morning. However, once again, bond prices and mortgage rates depend now on whether the stock indexes either increase or experience selling that will set the tone the rest of the day. Mortgage rates are very likely to trade relatively sideways this week. A lot of things can happen this week that could cause mortgage rate volatility. The most likely of which, are changes to the tax reform plan. As changes leak out, we are likely to see mortgage rates move up or down depending on the changes impact to the economy.