The stock market is still at the top of all-time highs, but flat so far this morning. Bonds are also relatively unchanged today, with MBS up 4 bps, and the 10 year treasury down to 4.01%. 4% is an important threshold and if we can break down below it–especially prior to the Fed meeting in two weeks–we could see conventional 30 year interest rates back down into the high-fives.
The uncertainty in the short-term future in the midst of the government shut down has been good for mortgage bonds. Despite being an employee of the federal government, Jerome Powell went to work yesterday and made a speech, where he said that the FOMC will begin slowing the runoff from their bond portfolio. Having the Fed re-purchase expiring bonds keeps the prices high and drives rates lower.
The Empire State Manufacturing Index that was published today was expected to read -1.8, an improvement over last months -8.7. Instead, we saw a +10.7. Manufacturing can be cyclical and consequently a difficult business from which to extrapolate meaningful Data. We will see the Philly Fed Index tomorrow which is expected to move in the opposite direction, dropping from 23.2 to 4.0.
I’m not a gambler when it comes to other people’s money, so I prefer to lock in the interest rate as soon as we get a purchase agreement put together. But I’m floating a few now for the first time in about a year.
