Mortgage Bonds Closed higher, matching the best closing price ever for the 3.5% coupon. While the drama in Europe and the weak U.S. Economy could mean more support for Bond prices and lower Mortgage Rates, we cannot ignore that the Bonds are at very lofty levels. Technically, if Bonds can break above the current ceiling of resistance, we could be looking at a 3.50% 30 year mortgage. I recommend floating, not locking mortgage rates at this time. But be ready to pull the trigger, as a reversal can get very ugly.
As reported by the May 4th Kiplinger letter. Expect to see inflation and interest rates above where they are now. They anticipate inflation to go to 4% from 2% and Mortgage rates for a 30-year fixed to be around 8% by 2020.
Economic News
The Unemployment Rate falls to 8.1% as April Nonfarm payrolls were reported at 115K and February and March numbers were revised higher by 53K.
The Europeon Central Bank leaves rates on hold at 1%.
Core Personal Consumption Expenditure (PCE) inflation data was a tame 0.2% in March, meeting expectations.
Personal Income rose 0.4% above the 0.2% expected.
Personal Spendng rose by 0.3% a bit slower than the 0.5% expected.