Since I last wrote about mortgage rates on Monday, almost nothing has changed. Rates are still sitting at or close to the lows of the year. On Monday yields on 10-year Treasuries were sitting around 1.76%. Yields are effectively unchanged now. Mortgage backed securities changed little on Monday and Tuesday, but are selling off this morning (sort of: Fannie and Freddies are down, Ginnies are close to unchanged). If the situation persists, we’ll see rates rise a bit today. There is a 10-year Treasury auction this afternoon that would pose a risk to rates if it goes poorly. However, yesterday’s 3-year auction went well, and most of the recent 10-year auctions have gone well too. I don’t think there will be a sea change in rates today. Rates have fluctuated within a ~15 basis point range since the beginning of February, and I can’t see that changing in the very near term.
Click here to get today’s latest mortgage rates.
Today’s economic data:
Outside of the 10-year Treasury auction at 1pm, we have once piece of interesting data today, and I use the term “interesting” very loosely here. The EIA’s Petroleum Status report for last week showed declining oil inventories for the first time in a couple weeks. Fires in Canada and attacks on Nigerian oil producing infrastructure evidently reduced supply.
Miscellanea:
This week is a real snoozer in terms of market-related news. Here are a couple of items that are either tangentially related to our markets, or are of interest to me:
- The recent Eurogroup meeting on Greek debt might have gone well. Greece got another round of bailout money, and some true debt relief measures were discussed. However, the Greek people themselves seem none too happy with the additional austerity measures that are being imposed upon them – specifically pension cuts and tax increases. If history is any guide, this won’t be the last time we hear about this. European bookmakers have the odds of a Grexit in the next couple of years around 5-1. Given a choice between investing in that bet or Greek bonds, I’d take the bet.
- Bernie Sanders walloped Hillary Clinton in West Virginia. The delegate math is such that his chances of winning are somewhere between zero and infinitesimal. He appears inclined to stay in the race until the end (at least he said so last night). What will be interesting to me will be to see if he throws his support behind Clinton in the general election, and whether or not his voters actually show up on election day. Most polls show Clinton as a double-digit favorite in the general election, but if the Sanders people stay home, that lead will shrink. Everyone expects her to steam-roll Trump in the general election, and that seems likely, but let’s bear in mind that we live in a world where *Donald Trump is the presumptive Republican nominee for president*. So it seems that anything may be possible.
- Tim Duy of Tim Duy’s Fed Watch makes the case that a June rate hike from the Fed is off the table. The markets agree. The implied probability of a hike in June based on Fed Fund futures prices: 9%. Beyond the economic data not being in favor of a hike, I would question the wisdom of a potential rate hike just a few days before Britain could potentially leave the Eurozone.
- Speaking of the Brexit referendum, current polling shows 41% voting “leave”, 40% voting “stay”, and 16% undecided. This is going to be fascinating, and if the Brits decide to leave, the fallout is going to have major market repercussions.
- The Solomon Islands, notable for being the site of some of the worst fighting during the war in the pacific are disappearing, at least in part due to climate change. I anticipate more and more headlines like this in the coming years.
Don’t wait for rates to rise. Start your mortgage process now.
What’s the outlook for mortgage rates?:
Steady as she goes is my best guess. Unless this afternoon’s Treasury auction goes very well or very poorly, I don’t see anything that would cause rates to move significantly today. Or tomorrow. On Friday we get the April Retail Sales report, which could cause things to move one way or the other, but in large part, bonds are reacting to equity movement (and perceptions of the Fed’s future course of action), and I doubt any single piece of data is going to significantly alter things one way or the other.
Long story short: rates are very low, and at the very least, it is worth a phone call to see if you could save money on your current mortgage. If you’re looking to buy a home, now is a great time to lock in a low rate.
Don’t wait for rates to rise. Start your mortgage process now.
Notable events this week:
Monday:
- Fedspeak
- Treasury auctions
Tuesday:
- Job Openings and Labor Turnover Survey
- Treasury auctions
Wednesday:
- EIA Petroleum Status Report
- Treasury auctions
Thursday:
- Weekly Jobless Claims
- Treasury auctions
- Fedspeak
Friday:
- Retail Sales
- Producer Price Index – Final Demand
- Fedspeak
from Total Mortgage Underwritings Blog http://ift.tt/1Wphy7z
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