Good Morning on this best day of the week Wednesday, from your Hometown Lender,

The big economic news of the day was the newest CPI Inflation report. It came in below expectations (.2 vs .3 with the shelter component dropping to the lowest in  12months, the inflation rate dipping to 2.8%) which should have helped bonds and has albeit minimally but not to the degree we should have seen. Mortgage bonds started the day off worse before getting a boost from cooler than expected inflation readings.

The challenge is that the economic data is no longer the link.

The political news from President Trump, well, trumps all. With the tariff picture in flux (we imposed 25% tariff on Canadian steel and aluminum, Europe imposed tariffs on US goods for unfair trade and the Canada imposed a 25% tariff on US goods), the push and pull is very confusing to manage. The bottom line as of now is that if the tariffs are believed to be inflationary, rates will suffer, if they are expected to curtail growth, rates will improve.  

The 10yr Treasury yield is rising, and is higher than we’ve seen in a couple of weeks.

Throw in that German Bund yields are still rising and the outlook for the immediate future is not great for rates, so I would lock. The longer term is still up in the air and will be influenced by next week’s Fed meeting.

Stay safe and make today great!!