Rates Refuse to Drop Ahead of Election. How About After?

It is our longstanding policy to strictly avoid politics except in cases where the political realm legitimately intersects with relevant events for rates. Now is clearly one of those times. The discussion that follows contains no opinion or partisan leaning. Before getting started, let's catch up with mortgage rates.  Things haven't been great and much of the media coverage focuses on Freddie Mac's stale weekly survey number.  Actual daily averages are already much higher. Today didn't offer any material change on that front, leaving us free to focus on what may lie ahead. There is an objective correlation between various measures of the election outcome and recent rate movement.  Correlation is not necessarily causality, but comments from several high profile investors have bolstered the case for a Trump victory resulting in higher rates.  Notably, many of them qualify that by saying it's more about the opportunity for full republican control of Congress and The Oval Office (i.e. the red sweep).   On one hand, there is certainly correlation here.  On the other hand, it's far from perfect.  Additionally, there are other key events in this time frame that definitely account for a good deal of movement in interest rates--possibly enough movement to think twice before assuming we can even know how rates would react to the election. Today's jobs report reaction provided the latest reason for doubt.  Rates refused to drop after a weak jobs report--something they'd normally be happy to do. There was an initial, reflexive drop in 10yr Treasury yields, as seen in the chart below, but it was quickly erased. Treasury yields are well-correlated with mortgage rates.  A chart like this can show us intraday momentum in the bond market whereas mortgage lenders only update mortgage rates 1-3 times a day depending on volatility.  This was a relatively low volume move for a jobs report-further suggesting the market's mind is elsewhere.