Mortgage Rates Still Moving Upward

Mortgage rates have started a tad higher today as a result from yesterday’s push in the mortgage bond markets.  In regard to the Stock indexes, there is no stopping them as the DOW has now crossed over 24,000.  At 11:00AM, the 10yr is pushing the threshold of 2.40%.

Earlier, we got the October personal income was a little better than forecasts, up 0.4% against +0.3%, and personal spending though +0.3% in line with estimates. Spending dropped from +0.9% in September. The PCE (personal consumption expenditures) a more significant data point, came in as expected.

Also, Weekly Jobless Claims remain generally stable.  Weekly claims these days do not carry much significance with traders - at 4.0% unemployment claims have ended their climbs and have been mostly unchanged for weeks after the roiling over the summer hurricanes.

We then got the November Chicago purchasing managers’ index, expected at 63.5 increased to 63.9 from 66.2 in September. Tomorrow the national ISM manufacturing index forecast is at 58.4 from 58.7 in October.

OPEC and non-OPEC oil producers meeting today and expected to extend output cuts until the end of 2018 to finish clearing a global glut of crude while signaling they could exit the deal earlier if the market overheats. The cutbacks to 1.8 million barrels/day was due to expire in March 2018.

Today may be the day the Senate votes on its tax plan if Republicans can be assured of the necessary votes to pass. If not, there will be no vote.

Technically speaking, the 10yr has moved from its resistance at 2.32% on Tuesday to now its near-term technical support at 2.40%. The last month the 10yr has stayed between 2.32% and 2.40% and has kept mortgage rates flat the last month. Inflation today (October PCE) is still not close to the Fed’s target, but markets remain convinced the Fed will raise its Federal Funds rate at the December meeting in about two weeks. The short end of the yield curve (2s thru 5s) have moved higher in anticipation of the increase. The long end (mortgages) focusing more on the lack of inflation and have not increased. Mortgage rate volatility is still a real possibility with tax reform hanging out there. Stock market is betting that something will get done, but uncertainty in the market is still helping to keep rates in a tight range.