Thursday, April 23, 2015 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
Rate markets a little better today after the strong selling took the 10yr to 1.98% from 1.91% on Tuesday. This morning March new home sales were lower than expected, with no noticeable reaction to the report. As I noted three months ago and many times since, any weakness in the economy is blamed mostly on the weather. Until we get April data the consensus is strong now that the economy will continue to improve.
Greece wants acceleration in talks to make a deal by the end of this month to get their hands on funds it desperately needs to avoid defaulting. Greece will be in the headlines and in market thoughts until July when a deal will likely get done. On again, off again will be the tenor - in the end though Greece will get a deal to keep it in the EU. This has been going on now for 5 years, it is not likely to end badly for Greece or the EU as there is too much at stake for both sides. Between now and then we have bigger fish to cook when focusing on where US interest rates will go.
Tomorrow March durable goods orders will be the only domestic data for the day. Expectations are an increase. Global issues will fade into the background somewhat now with the FOMC meeting on next Tuesday and Wednesday. Treasury will also auction $90B of notes beginning Monday with $26B of 2s, Tuesday $35B of 5s, and Wednesday $29B of 7s.
Even though some of the bullishness was lost yesterday with the levels on the 10yr note, I am not yet willing to completely abandon the view rates will decline in the longer outlook (1.50% on the 10yr later this year). The near term is now neutral for the short term outlook. The 10yr held at 1.98% the highest since late March today and yesterday, next week will allow more clarity.
In summary, mortgage rates remained the same today, but the risk of a continued move higher is still the greatest fear. I personally believe that locking is your best choice if you are closing in the next 15 days. I am watching closely the rates the next few days and if we can hold this level or see even a slight move lower - then I am back to cautiously float. Until then, locking remains the best policy.
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