Tuesday, December 5, 2017
What's going on and why does it matter?
Mortgage bonds seem to be cautiously making a rebound toward their 200-day moving average. There are several factors that seem to be making bonds relatively attractive for financial market investors at the moment. There is some risk to the Republican tax plan as the Senate and House still need to reconcile their different versions of the bill. Also, there is the potential for a government shutdown at midnight on Friday if Congress is unable to agree on an extension in the debt ceiling. Additionally, there are ongoing headlines on special counsel Mueller’s investigation into Russia meddling in the US presidential election. All these items are causing uncertainty in the market, which tends to be favorable for bonds. The Fed is a heavy buyer of bonds this week, and they are scheduled to purchase up to $1.405 billion of GNMA mortgage bonds today.
What should you do about it?
Watch for mortgage bond prices to continue their rebound toward their 200-day moving average, but be prepared to lock your rate quickly if the market changes directions.
Economic reports that may impact mortgage rates this week: