Wednesday, April 13, 2016 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
Mortgage rates pulled up slightly today after spending the past few days near 3-year lows. The weakness in rates is in line with my discussion yesterday regarding the fact that bond markets were already suggesting a small move higher, but that quite a few banks held off until today to make those moves. The underlying assumption was that all things being equal we were due a bit of a move higher today, simply because we avoided it yesterday largely due to timing.
March retail sales were weak, March PPI also less than forecasts, February business inventories was in line but January was revised lower, with auto sales were lower in March than in February. Markets looked passed the softness though with the stock market improving on wishful thinking now. Crude oil a little lower today but meaningless with the oil producers scheduled to meet this weekend to chew over a production freeze. This afternoon Treasury auctioned $20B of 10yr notes that was a strong auction with good demand.
The Fed's Beige Book this afternoon put a little lipstick on the pig, a normal process for the Fed staff. Emphasizing the good and sweeping reality under the rug. The FOMC uses the Book at the FOMC meeting later this month.
More from the IMF today warning of a spiraling weakening of growth while debt is increasing. Fiscal deficits in 2015-2016 in emerging economies are projected to exceed levels during the global financial crisis, as countries struggle with low oil prices, cooling investor sentiment and intensifying geopolitical tensions. Yesterday the IMF worried about stagnation unless policy makers take strong action. What else can they do, and will. It help? We doubt policy makers have much left in their bags.
Tomorrow weekly jobless claims at 7:30 followed by the March CPI. At Noon, the Treasury will auction $12B of 30yr bonds re-opening the bond issued in February.
In summary, mortgage rates are near 3 year lows and for that reason alone, I believe locking was the best option today. If you've been thinking of refinancing, it makes sense where you are at today, then cease the opportunity. I feel the exact same way on purchases - what are you waiting for? You know what I say when one procrastinates - Pigs Get Fat - Hogs Get Slaughtered!
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