Later tonight President Trump will deliver his State of the Union address to a joint session of Congress. Generally the US president will use the address to communicate the state of the national budget, economy, and layout priorities for the coming year.
In other words, it’s a great night to binge watch “Friends from College” season 2.
Mortgage Rates
Interest rates remain at the best levels since April of last year. Will they reverse course and move higher? Or might they go even lower?
Technical Signals
The economic calendar is relatively light this week so I expect interest rates to react to technical trading patterns.
Currently, the yield on the US 10-year treasury note is trading up against its 3-month trailing trend line. I will be watching to see if the yield can bounce lower off this level. If so I expect home loan rates to improve.
If not, watch out as rates will likely increase by .125%-.25% in the coming week.
Home Prices
Core Logic released its monthly Home Price Index report earlier today. It showed that on average home prices across the US increased by +4.6% from last year. This confirms trends seen in similar housing data.
Home prices continue to increase but at a pace that is declining. This is much like a car that is slowing. Home prices continue to move ahead but at a slower speed than they have previously. Home prices are not reversing and going backwards despite the media’s spin.
Outlook
I expect mortgage rates to react based on the aforementioned technical trading patterns. What may make it difficult for mortgage rates to improve this week is that the US Treasury is scheduled to auction ~$84 billion in fresh bond supply. Last year at this time the US government only had to auction ~$66 billion to funds its budget.
Read THIS LINK to learn how this can adversely impact home loan rates.
Current Outlook: cautiously floating