Mortgage bonds have been unable to break out of the downward trading channel that has pushed mortgage interest rates higher in recent days. Once again, bonds are down today in early morning trading and remain close to putting mortgage rates at multi-year high levels. Most experts believe that we will continue to see gains in the US stock market in the months to come, which will continue to pressure mortgage interest rates higher as investors sell their safe bond portfolio to invest in the greater return opportunity of the stock market.
US Retail Sales climbed by less than the market anticipated in the month of August, coming in at just a 0.1% increase. This was well below the 0.4% gain anticipated. However, it is coming off a month that showed a 0.7% growth rate. Therefore, the lower report is still overall very strong. Given that Retail Sales is one of the most powerful forces to impact the US economy, it’s nice to see this number strong. The past two months continue to signal a strong labor market as employers staff to meet consumer demand.
The countdown to Brexit continues to tick, with many uncertain as to how the transition will impact them personally. With opposition against Brexit building, we may see a stronger fight to keep Britain in the EU. If it does happen, the question remains as to whether it will be a hard or a soft exit. Either way has consequences, but a soft Brexit could cause less damage. As far as the impact to mortgage interest rates, remember that the Brexit announcement pushed mortgage rates down to near the lowest rates in history. So talk of Brexit not happening will likely drive rates higher.