Mortgage Rates Moderately Higher - All Good Things Must Come to an End
Mortgage Rates
moved moderately higher today, giving back some of the impressive gains
seen since last Thursday. Most of that improvement came on Friday, following
the shockingly weak employment data. Thankfully, those gains are still intact
for most lenders, and with the exception of yesterday, today's rates are the
best since late November. 4.5% remains a more prevalent rate quote for
the the best-qualified conforming, 30yr fixed scenarios.
Today's movement was much ado about nothing. Although we had an important piece of economic data this morning in the form of Retail Sales, it didn't motivate this weakness. The bond markets that underlie mortgage rates were already on the move before the data and found other reasons to move afterward.
One of those reasons is the stock market. Before the financial crisis, stocks and bonds spent a lot more time being a lot more correlated than they have been in the past 5 years. This has been especially true into (and now out of) QE3 which served to benefit both stocks and bonds (whereas they usually benefit at the other's expense).
The dynamic that exists in financial markets around the end of the year (and beginning of the next) can often make for large-scale shifts in investment preferences. Into the end of 2013, bond markets (where strength benefits mortgage rates) were clearly in the doghouse. Meanwhile, stocks soared to all-time highs right as trading ended for the year.
So far in 2014, we'd been waiting for that dynamic to continue or reverse. It didn't really happen in a clean way. Bond markets reversed their weakness, but unconvincingly so, until Friday's jobs report. Stocks didn't really get on board with this (by falling significantly) until yesterday. The weakness in stocks benefited bonds/rates.
Now, a day after losing more than 20 points in the S&P yesterday, stocks are back up another 20 points today. That same incremental weakness that had been helping interest rates yesterday is now a negative factor today.
Long story short, we're still settling in to 2014 trading. Were bonds weak enough in 2013 that they could have a bit of recovery now? That question would have seen more "yes" responses yesterday. Today makes it less certain.
The only real certainty is that market participants won't over-commit in either direction until they hear from the Fed at the end of the month. That means yesterday is currently the low end of the rate range and Thursday is the high end (4.5% to 4.625%).
In summary, all good things must come to an end, and our two day MBS winning streak did so resoundingly today. Back to a locking bias, can't rely on rates improving in this market.
If there is anything you need, please give me a call at 314-744-7806, or click on the link below:
Call The Money Man
Today's movement was much ado about nothing. Although we had an important piece of economic data this morning in the form of Retail Sales, it didn't motivate this weakness. The bond markets that underlie mortgage rates were already on the move before the data and found other reasons to move afterward.
One of those reasons is the stock market. Before the financial crisis, stocks and bonds spent a lot more time being a lot more correlated than they have been in the past 5 years. This has been especially true into (and now out of) QE3 which served to benefit both stocks and bonds (whereas they usually benefit at the other's expense).
The dynamic that exists in financial markets around the end of the year (and beginning of the next) can often make for large-scale shifts in investment preferences. Into the end of 2013, bond markets (where strength benefits mortgage rates) were clearly in the doghouse. Meanwhile, stocks soared to all-time highs right as trading ended for the year.
So far in 2014, we'd been waiting for that dynamic to continue or reverse. It didn't really happen in a clean way. Bond markets reversed their weakness, but unconvincingly so, until Friday's jobs report. Stocks didn't really get on board with this (by falling significantly) until yesterday. The weakness in stocks benefited bonds/rates.
Now, a day after losing more than 20 points in the S&P yesterday, stocks are back up another 20 points today. That same incremental weakness that had been helping interest rates yesterday is now a negative factor today.
Long story short, we're still settling in to 2014 trading. Were bonds weak enough in 2013 that they could have a bit of recovery now? That question would have seen more "yes" responses yesterday. Today makes it less certain.
The only real certainty is that market participants won't over-commit in either direction until they hear from the Fed at the end of the month. That means yesterday is currently the low end of the rate range and Thursday is the high end (4.5% to 4.625%).
In summary, all good things must come to an end, and our two day MBS winning streak did so resoundingly today. Back to a locking bias, can't rely on rates improving in this market.
If there is anything you need, please give me a call at 314-744-7806, or click on the link below:
Call The Money Man
Comments
Post a Comment