Stocks slide on trade fears helping mortgage rates

How does a team go undefeated in the World Cup and not win the whole thing?  Easy, not qualify. For those US soccer fans there is reason to celebrate today.  On this day in 1950 the US men’s soccer team beat England in a major upset.  

Mortgage rates traded sideways last week.

US Stocks

The US stock market is not celebrating the trade threats that continue to escalate between the US and China.  Over the weekend the Trump Administration announced rules which will limit Chinese companies from investing in US technology companies.  

US stocks opened sharply lower this morning. Bad news for the economy tends to be good news for home loan rates.

Housing

Last week the National Association of Realtors announced that the pace of existing home sales had slowed in May.  However, the median home price continued to climb on tight supply.  The median home price in the US has increased for 75 straight months.

Earlier today the Commerce Department announced that the number of contracts for the purchase of newly constructed homes increases substantially year-over-year.  This is welcome news given that there continues to be a shortage of housing.

Technical Trading Patterns

The yield on the US 10-year treasury note has broken below an important technical layer.  If it can close below 2.88% then it may be a signal of lower rates on the horizon.  Fingers crossed.

The Week Ahead

This week’s economic calendar kicks off tomorrow with the Case-Shiller Home Price Index.  On Wednesday we’ll see durable goods and pending home sales. On Friday we’ll get personal income and the Fed’s favorite gauge of inflation.  

I recommend floating as long as the US 10-year treasury note is at or below 2.90%.  If it reverses higher then we’ll need to lock in.

Current Outlook: floating