Thursday, May 18, 2017

What's going on and why does it matter?

Mortgage bond prices are continuing to improve after yesterday's massive rally. 

Financial market investors have been selling stocks and buying bonds in what's known as the "flight to quality trade."

Overnight news saw the appointment of a special prosecutor to investigate Russian ties with the Trump campaign, and Reuters is reporting that the Trump campaign had "at least 18 calls and emails with Russian officials and others with Kremlin ties during the last 17 months of the 2016 presidential race." 

The drama unfolding in Washington DC may very well derail any significant economic stimulus or tax reform this year. Mortgage pricing is approaching its best levels of the year as mortgage bonds get ready to test their 200-day moving average for the first time since the Presidential election last November. The Fed is scheduled to purchase a sizable $1.625 billion of 30-year conventional mortgage bonds today, which may help to propel bond prices higher.

What should you do about it?
Watch for mortgage bonds to continue improving from these levels, but be prepared to lock your rate if the market changes directions.

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