Are looking forward to tonight’s NCAA men’s basketball championship game between Gonzaga and North Carolina? Did you know the greatest upset of all-time came on this day in 1978 when the Movie ‘Annie Hall’ beat out ‘Star Wars’ for best picture? Absurd.
We start the week with mortgage rates at the best levels since late February. This is partially because of the unfortunate subway blast which took place in St. Petersburg, Russia earlier today. Geopolitical uncertainty tends to drive investors into safe-havens which helps US interest rates.
The financial markets are seeing some follow through on President Trump’s failed attempt to repeal the Affordable Care Act. The Trump administration had planned to spend some of the Federal Government’s savings on a fiscal stimulus package which will have to be scaled back now. Rates had been pressured higher on the expectation of a large fiscal stimulus package and are moving back down now.
The economic calendar heats up on Wednesday this week with the release of the minutes from the Fed’s latest monetary policy meeting. Analysts are eager to learn more about the committee’s plan to unwind the Fed’s balance sheet which grew during the housing downturn via quantitative easing. The Fed is a major holder of mortgage-backed securities which ultimately determine mortgage rates. Should they aggressively sell off these assets it would put upward pressure on mortgage rates.
Finally, the all-important monthly jobs report is due out this Friday. The market is currently expecting ~175,000 new jobs. A number north of that would hurt mortgage rates and vice versa.
From a technical perspective momentum is on our side but given that we’re at multi-week lows I like a locking bias.
Current Outlook: locking bias