The past couple of market updates have mentioned that it will likely take a political or global event to help push mortgage bonds above the stiff resistance that has held mortgage rates back from further improvement since November of 2016. Well, yesterday we received just what we needed to lower mortgage interest rates. To begin with, President Trump stated that the dollar is currently too strong. Secondly, in a change from prior campaign rhetoric, he reversed his statements that China was a “currency manipulator”, and is now offering China’s President Xi a more favorable trade deal in exchange for help with North Korea. These surprising changes of tone add more uncertainty to the markets, which is creating a massive flow of money into the safe haven of mortgage bonds.
Just this morning, we received news that the United States military dropped the largest non-nuclear bomb in their arsenal on an ISIS tunnel in Afghanistan. This is the first time this type of bomb has been used in combat. Given that this news was just released, we will have to see how this is accepted by the markets. We would generally expect money to flow into the bond market as stocks sell off. However, we will have to wait and see.
In addition, tension in both Russia and North Korea continue to mount. It seems that the North Korean leader, Kim Jong-un is taunting the Trump administration with threats of retaliation if the United States takes military action against them. Once again, this will not be friendly for stock investors and could help mortgage rates improve even more.
Markets will close early today in advance of tomorrow’s Good Friday holiday. There is no immediate rush to lock at the current time. If global events continue to escalate between now and when the market next opens on Monday, we could see the rate improvement continue. However, if you don’t wish to take a gamble, rates are as good now as they have been since late November. Locking is a good idea for many.