News out this morning is that the shut down might be coming to an end if the House and the President will sign off on the Senate’s much debated negotiations. With tomorrow being Veterans Day and Wednesday of course being Hump Day…then Thursday the weather’s pretty good so people will want to play some golf. With that demanding schedule, there’s no way that the federal government will open any sooner than this coming Friday.
Historically, a government shut down would be accompanied by a downtrend in interest rates. The longer the shutdown, the lower the rates. This hasn’t happened this time around. Worse, now that there is hopefully and end in sight, mortgage rates are once again taking it on the chin and ratcheting upwards a notch or two. On Wednesday the Fed will action off $125 billion in Treasury notes, which will most likely further drop the price/raise the yield of long-term debt.
Technically, MBS prices have drifted below the 50 day moving average that’s kept rates at present levels. The hundred day moving average is about 60 basis points beneath us, and drifting that far downward would correlate to 0.125% increase in mortgage rates.
