Domestic Political Issues
The temporary funding bill this weekend that averted a government shutdown more or less kicked the can down the road for 45 days. We will likely find ourselves in the same situation right before Thanksgiving. For now, the government will continue to operate as usual. Theoretically, this weekend’s events should cause a stock rally, bond selling and an upward move in mortgage rates. We can expect to see the gains from late last week, that were fueled in part by an expected shutdown, to be reversed. At the time of this evening’s posting of this report, it does look like Treasuries are reacting that way in overseas trading. A lot can happen between now and tomorrow’s open, but unless there is a change in direction overnight, we can expect an increase in tomorrow’s mortgage rates unless the day’s economic data comes in much weaker than expected.