The U.S. Dollar Continues to Slump

Mortgage bonds took a turn for the worse this morning which started with a gap down opening.  The weakness in the bond market is amplified by stocks which are again setting new all-time highs.  The story continues to be the same, with interest rates being the overall losers in the new market reality.  With bonds now back in the downward channel, we can expect to see mortgage rates continue to worsen in the days, weeks and months to come.  Because rates never move in a straight line, we will see times when rates are better than others.  However, it will mainly be times when rates are deteriorating. 

The value of the US dollar has been falling sharply, which is a move that seems to be choreographed by the Trump Administration.  As the US dollar weakens, it makes US goods and services cheaper outside of the country, which is good for large organizations operating internationally.  Again, this is not good news for mortgage interest rates, as it could spur increased inflation.  That would add additional upward pressure to mortgage interest rates, which are now close to multi-year highs in recent days. 

There is nothing worth celebrating in the bond market.  A locking bias is prudent.