Mortgage Rates Trading in Tight Range

Mortgage rates were unchanged today.  Bond markets began the day heading into stronger territory (lower rates), but gave up much of the gains by early afternoon.  The stock market roared today, as was the case yesterday. While the bond and mortgage markets held their ground with minor gains with the 10yr note, this tight range has lasted now since the end of September.

Better earnings in Q3 and recently better outlooks for the retail sector. Strong beliefs consumers will spend nicely for the holidays. The bond market relieved by comments from the ECB that the bank will make only minor adjustments to its QEs in 2018. The current thinking in markets is that the uncertainty in Germany is a second seat to the ECB. ECB has for the last two years been more concerned on the lack of inflation as a drag on the EU than has the Fed. The Fed of course also concerned that inflation is not increasing. Minutes from the European Central Bank’s October meeting due on Thursday could show dissent in the discussion about tapering.

Tomorrow wraps up this week’s data and by noon the halls will begin to empty. Weekly MBA application data, October durable goods orders, and the U. of Michigan consumer sentiment index comes out, along with the minutes from the October FOMC meeting.  I do not expect the minutes will have any surprises, as the Fed is on track to increase the FF rate in mid-December.

No place to go to invest to make money - other than US and global equity markets and it is not abating. Stocks markets from Asia to Europe to the Americas rose, while the three top gauges of Wall Street performance hit record intraday highs, lifted by technology and healthcare shares. No inflation keeping interest rates very low worldwide.  Central banks trying but have yet to find success in explain or understanding why inflation in wages is lagging and consumer prices stable with very little increases. The Holiday season is not going to include higher prices, just the opposite, prices declining on the scramble to increase sales. Today a big improvement in US stock indexes - very little concerns about any economic retreat and the coming tax cuts will add to the bottom lines of many public companies. Hard to find a reason to sell yet and new highs continue to pile up.

Still technically neutral - not either bullish or bearish for the long end of the yield curve (including mortgage rates). Short term interest rates continue to increase.  2018 likely to see higher rates on autos and any short-term borrowing tied to short term treasury rates.

In summary, it seems odd to say the work week is winding down on Tuesday, but that's how it feels.  Bond markets stayed within narrow ranges today, and tomorrow promises more of the same, as does Friday.  Looks unlikely we will see any substantial pricing changes until next week, if then.