Mortgage Rates Going Negative

The day has started with three data points this morning all were mixed. Weekly jobless claims came in higher, January CPI came in lower than expectations, and Durable Goods Orders came in better than expected.  With all this data, the markets came out flat with the 10yr trading at 1.98% and the MBS’s nearly unchanged from yesterday’s levels.

Some better economic news did come out of Europe this morning.   Even with their data being better this morning, the mortgage rates are going negative.  Even with this news and the mix US data, traders are kind of ignoring the US data this morning, focusing a little more on the improved report out of Europe. The increase in claims likely most from the oil world where lay-offs are increasing as producers are slowly cutting back. Durable goods can be explained with the increase attributed to seasonal adjustments in the aircraft industry.

Floating overnight was not too bad, but I did note the risk being elevated.  However, not a good call based on where we are trading presently. The 10yr has failed so far at the 20 and 40 day average and the momentum oscillators did not make the crossover, holding at neutral levels.  We are currently seeing the 10yr at 2.0% at Noon, which is a level I do not like.  Tomorrow the preliminary Q4 GDP report may be keeping traders uncertain.

My recommendation, the risk is too much as the rewards are not yet to be seen on the horizon.  All indicators seem that there will be a turn, but I would have cautiously floated if not the turn I am seeing presently.