Mortgage rates are slightly better to start the week. In case you live under a rock I will remind you that the partial government shutdown continues for the 7th day. Initially I thought this shutdown would be short lived but clearly that prediction was wrong.
Over the weekend House Speaker John Boehner announced that he would not bring a bill to fund the government to vote unless Democrats agreed to talks aimed at trimming the deficit. The announcement is being explained from a variety of perspectives but the bottom line for mortgage rates is that it introduces greater uncertainty. Uncertainty leads to a “flight-to-safety” on the part of investors which benefits mortgage rates.
In case you’re wondering, during the previous partial government shutdown that took place in November 1995-January 1996 mortgage rates also fell.
Normally on Monday I would forecast the week’s economic calendar. However, given the partial shutdown most of the reports due out on an already light calendar will not be delivered.
In the absence of fresh economic news focus will rest on developments in the budget negotiations and technical trading patterns. We’ve had a nice ride lower over the past couple weeks. My concern is that once Congress gets a deal figured out we will give our gains back in a hurry. For now we will be remain in a floating position but I’ll remain on guard.
Current Outlook: floating