Texas Real Estate and Mortgage Rollercoaster

Just the mention of increasing interest rates sent markets into a little frenzy yesterday afternoon when the FOMC minutes were released. A few of the participants shook the tree; sending the stock market down from gains prior to the release, and the 10 yr and MBSs down in price and up in rates. 
•           "Participants agreed that, with the unemployment rate approaching 6-1/2 percent, it would soon be appropriate for the Committee to change its forward guidance in order to provide information about its decisions regarding the federal funds rate after that threshold was crossed. A range of views was expressed about the form that such forward guidance might take. Some participants favored quantitative guidance along the lines of the existing thresholds, while others preferred a qualitative approach that would provide additional information regarding the factors that would guide the Committee's policy decisions."
•           "A few participants raised the possibility that it might be appropriate to increase the federal funds rate relatively soon. "

Prevent the economy from overheating? Not sure what they intake in the those FOMC meetings, but worrying about an overheated economy is definitely tilting at wind mills. Maybe a year or so down the road, presently the economy is nowhere near any overheating and inflation is no worry; the worry at the Fed should be about deflation. The Fed seems obsessed about the unemployment rate as a significant benchmark; the unemployment rate is so subjective it is difficult to draw much from it.  The US economy is slowly improving, at least based on the last data that had any significant meaning---last November. No one is sure now because of Mother Nature. 

Chinese manufacturing index fell to the lowest level in seven months, The preliminary February reading of 48.3 for a Purchasing Managers’ Index (similar to the US ISM)  released today by HSBC Holdings Plc and Markit Economics compares with January’s final figure of 49.5 and the 49.5 median estimate in a Bloomberg News survey of 17 economists. 


Interest rates; for all the ink spent over the last two weeks, have not changed much. Moving back and forth in a narrow range the 10 yr note isn't experiencing any significant movement. The note remains close to its key short and longer term averages; traders can’t push the rate over 2.78% and equally can’t hold the rate under 2.70% for more than day or two. All of our models and the momentum oscillators are flat-lining at neutral; neither bullish or bearish. Not sure how long the rate markets can hold at these levels but when the 10 moves out of the tight range the initial reaction will drive quickly in the direction of the breakout, and take mortgage rates along for the ride.

I would suggest locking your rate if you are planning on closing soon, but if you choose not to lock your rate stay focused on what the markets are doing.
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