Mortgage rates may improve slightly today as traders keep making money pushing the mortgage-backed securities market in a different direction each day. With no outcome of the political debacle unfolding in Washington easily discernible, traders just keep money in motion. Money in motion earns the greatest returns. Home purchasers and refinancers should focus on safety and lock-in current mortgage rates if possible.
Paul McCartney famously stated, “If slaughterhouses had glass walls, everyone would be a vegetarian.” Watching our American political process is much like having a clear view inside a meat packing plant. If you want to avert your eyes from the political process in Washington, you may find the view of the trading floors in New York and Chicago more interesting. The financial markets offer a way to observe the effects of the political turmoil without having to watch the process directly.
From my perspective the markets are telling us that they are concerned with the political uncertainty, but not in a panic over possible financial fallout. Yes, the stock market has headed meaningfully lower, but the downward move has been quite “orderly”. The bond market, which is more directly connected to the debt crisis, has been even less affected. The debt markets expect a resolution.
In the midst of the chaos over the debt ceiling increase debate some good economic news was released. For the first time in 4 months the new claims for unemployment benefits fell below 400,000. However, like some many economic reports lately the news wasn’t all good. Continuing claims edged higher and last week’s first-time claims number was adjusted higher. Nevertheless, good news on the job front really is good news. If next week’s report can begin to demonstrate a positive trend, we may be witnessing an important turning point in our multi-year battle to escape the impacts of the housing and financial crisis it wrought.
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