Mortgage Rates Steady

Mortgage rates held steady today even though the Mortgage Backed Securities (MBS) improved over yesterday’s close.   Underlying market movement was volatile, but only in the context of a fairly narrow range.  Geopolitical concerns, stock market weakness, and trading considerations relating to today's Treasury auction helped bond markets improve at their fastest pace of the day in the afternoon.  The most prevalently quoted conforming 30yr fixed rate for best-case scenarios is still at 4.25% but 4.125% is coming into range.   

From one end of the narrow range to the other, but no break out yet. The 10yr still has rock solid support at 2.66% an equally rock solid resistance at 2.58% where it resides presently. Technicals still neutral. Iraq is the driver for safety moves and possibly lower interest rates; the better economic data for May the driver for higher rates, neither has the force to change rates at the moment.

The markets were overrun this afternoon, investors tossed out the better data this morning as more violence was reported from Iraq. The DJIA declined 119 points on the news and the 10yr and MBSs gained in price as a result. Syrian planes entered the war yesterday and again today, killing 50 people according to the WSJ and injured 132 more. Syria supporting Iraq against the Sunnis, just as Iran is doing.  The situation in the mid-east is picking up momentum -  Iraq unable to take care of itself leading to Iran on the east and Syria on the west increasing their involvement. The entire region is becoming increasingly unstable.

In general, the overall range of rates has been exceptionally narrow for longer than such narrow periods tend to last.  It's anyone's guess as to the event(s) that will prompt a break from that range.

In summary, economic data appeared to "heat up" a bit more today with market volatility perking up and pricing improving a little bit. But, appearances can sometimes be misleading. Nothing has really changed in a significant way and we remain range bound with little movement overall. Tomorrow gives us another chance at a more significant move with Final 1st Quarter GDP numbers but a bad quarter is pretty much already baked in. Simple locking advice is to go by your risk tolerance until a more decisive market direction can be ascertained.