Texas Real Estate and Mortgage Rate Update

A weaker open in the stock market is improving the bond and mortgage markets this morning. The current concern in equity markets, globally and in the US is worries that China’s economy is slowing. Monday China reported a decline in its exports, suggesting a slowdown caused by slowing global markets, especially in emerging economies. China announced last week an economic growth target of 7.5%, the weakest since 1990, and saw its first onshore bond default after a solar-panel maker failed to make an interest payment. Tomorrow China will report its industrial production, traders expecting a decline.

Ukraine’s interim Prime Minister meets U.S. President Barack Obama and Secretary of State John Kerry in Washington today. The Russian Foreign Ministry said yesterday that U.S. aid to the acting government in Kiev would violate American law, because the departure of Viktor Yanukovych last month constituted a coup. Russia’s takeover of Crimea, home to its Black Sea Fleet, has sparked the worst crisis with the West since the Cold War as the European Union and the U.S. try to use sanctions to force President Vladimir Putin to retreat. The situation is likely to go on for months, but still isn’t directly effecting markets.

Taking a wider look at the interest rate markets; there has been little change in rates now since late January. The 10 is swinging back and forth on each data point. The US stock market is increasingly more vulnerable to soft economic reports here and globally. After the 2013 explosion in stocks the equity markets are in a consolidation phase awaiting more data where weather isn’t an issue. The 10 has very solid support at 2.80% as we have noted this week; resistance at 2.70%. MBS prices tied into a 100 basis point price band. We are essentially neutral toward the outlook as are most traders these days. In the longer outlook we are bearish toward the economy and therefor slightly bullish on interest rates. 

 I still see little concern that rates will increase much if any this week. On the flip side there is less reason for them to go down further. I would suggest floating your rate unless you are closing in the next week. Stay focused though.