Mortgage Rates Steady - No Data to Digest

Mortgage rates again held steady today, but like the past few days, did not move even a tad one way or another.  Currently we are seeing the rates at the lowest level in roughly three weeks now.

Underlying financial markets have been calm so far this week as investors wait for any relevant details regarding the tax reform process.  This week does not have much domestic economic data to think about. The situation in Saudi Arabia may be keeping support for US treasuries but so far we cannot quantify or endorse that idea. The Saudis are cleaning house of the corrupt billionaires that the Crown Prince Mohammed bin Salman saying is time to sweep up those that have been stealing from the Saudi people. Not sure what the specifics are but I like what is occurring with Lebanon. Saudi Arabia has opened a new front in its regional proxy war with Iran, threatening Tehran's powerful ally Hezbollah and its home country Lebanon to try to regain the upper hand. The Saudis and Iran are at war - not directly but the tensions are increasing, led by Iran supporting Yemen where millions are starving to death. Can it impact the rest of the world’s economies or lead to an actual war? I am not qualified to speculate on that possibility or potential, but it is having some support in global sovereign debt markets.

Treasury sold $24B of 3yrs this afternoon in a sloppy auction. Tomorrow Treasury will sell $23B of new 10yr notes, as that auction will be more important to the mortgage markets than today’s 3yr note.  

The bellwether 10yr note yield at 2.31% hugging close to 2.32% resistance but still looks generally positive with momentum oscillators. Going to be a test tomorrow whether buyers can push it below 2.30% and hold below it. The 10yr note auction tomorrow afternoon looms to add a little resistance in the morning. That said, and to repeat the same thought, it is about how the equity markets perform - unless the indexes come under pressure the likelihood of any significant rate declines is difficult to square. Today early this afternoon it looked like the key indexes might experience selling; as usual it didn’t happen. Stopping the continual increase in the indexes tantamount to trying to stop Niagara Falls from flowing.  

In summary, so far this week has been very friendly to floaters.   Bonds continue to add onto yesterday's modest gains and i am seeing better priced rate sheets.   I still think that is a wise choice to lock, especially if closing within 30 days.   We have pretty solid resistance not far below current levels, so not sure how much more we can improve without something substantial happening.