Mortgage rates are uneasy today as we see this morning stock indexes were lower early, crude oil was lower but no improvement in interest rates. A complete opposite trend from yesterday. The 10yr note still has resistance at 2.00%, closing yesterday at 2.01% after trading down to 1.98% at one point yesterday, and is currently at 2.03% at 11:00AM. MBSs are hampering along in negative territory at a minus 10BPS. In earlier trading crude oil was down $1.00 after increasing $1.00 yesterday. So far today the link between crude, stocks and bonds has broken with the FOMC policy statement this afternoon.

December new home sales came in better than anticipated, the best totals since last February. New home sales are contracts signed but not completed. A very nice number. No market reaction so far and not likely with FOMC dominate today.

Nothing of market importance now until 1:00 this afternoon when the FOMC policy statement is released, there is no Yellen press conference and nothing from the Fed on economic forecasts. Treasury will auction $35 of 5yr notes one hour prior to the FOMC statement, not unusual to have an auction just ahead of the Fed but this time may keep potential bidders a little cautious. Since the beginning of the year Treasury auctions have been well bid by foreign central banks and large investors.

The Fed has been missing the target on US growth for most of the last two years - making the low unemployment rate a keystone, as do most economists, but job quality is not as good as the statistic of 5.0% might imply. Businesses are expecting slowing this year, forward guidance is not encouraging, yesterday Boeing's forward guidance for 2016 was well below what was expected by analysts. Apple I-phone sales were weaker than thought. Because of this, hedge funds losing. Anecdotal I admit, but we expect consumer spending to be slower this year. Consumers hold 70% of GDP growth, any contraction there will dampen growth prospects this year. Yesterday though the consumer confidence index for January was better than expectations. Weekly jobless claims are increasing, and has been since late October.

Since the year began the bellwether 10yr note yield has declined 18BPS as of this morning, having strong resistance at 2.00%, unable to breakout. 30yr mortgage rates are down. The move lower driven by the decline in equity markets and crude oil prices dropping. Both stocks and bonds may be ready to turn this afternoon after the FOMC statement; if that occurs it will not signal a reversal of the weak economic outlook but a technical reaction. The DJIA for all of the hand-wringing down just 8% from its high. The possibility of a retracement is increasing - too much near term bearishness permeating now. If that occurs interest rates will move up a little. The wider outlook though remains bearish - I believe the DJIA will decline to 13-14K before the middle of the year and interest rates for mortgages possibly down to record lows from two years ago.