Mortgage Rate Update April 7, 2016

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Mortgage rates have held steady this week and 2016 lows.

As I wrote on Monday the economic calendar has been light this week so it is not a surprise to see rates hold steady.  Lower yields in Germany and Japan continue to help suppress US interest rates.

Wall Street legend Art Cashin released a note this morning advising market watchers to pay attention to money supply.  This is a measure of how much currency exists in our economy and how frequently it turns over as a result of transactions.  The reason this rather obscure measure is important to watch is because of an equation which states that, “MV=PQ”, also known as the Quantity Theory of Money.

04-07-MVPQ

If money supply (M) increases along with velocity (V) and GDP (Q) holds steady or grows slowly then according to the equation inflation (P) must increase.  Inflation is the nemesis of mortgage rates.  More to come on this in future rate updates.

From a technical perspective the US-10 year treasury yield still have room to the downside so I will remain in a floating position.

Current Outlook: floating

The views and opinions expressed in this site are those of the author(s) and do not necessarily reflect the official policy or position of Cherry Creek Mortgage Co., Inc. This is for informational purposes only. This is not a commitment to lend.