Mortgage rates rose at its fastest pace this year, but
are still at low levels compared to what has been seen in the last 21
months. Crude oil retracing after the huge move lower, as well as the
debt crisis in Greece cooling down – are the two key elements that drove
interest rates lower are now no longer as influential as they were a few days
ago.
Oil prices rallied to a one-month high on today,
providing investors some respite from a prolonged selloff that rattled
financial markets, the energy sector and oil-dependent economies. The fourth
consecutive day oil prices have increased, the best rally in crude since last
August, up 20% from the recent lows.
Last week there was fear that Greece would have
to exit the EU because of its heavy debt and the austerity plan placed on it by
the EU and ECB. Today some possible light on comments that the new regime
may be more willing to talk. There is nothing concrete and Germany is still
going to make it difficult for the country. Nevertheless the fear factor that
added to the decline in US rates was likely overdone for the moment.
Tomorrow ADP will report its private jobs data. The mix of jobs is
key - how many “good” jobs compared to the low paying service sector jobs. Also
tomorrow the January ISM service sector index will be released after the
markets open. Recent measurements on the economy have not been that good,
as personal spending, retail sales, and durable goods orders were all weaker
than expected. With December factory orders came in lower than
expected, and November figures revised downward – it is likely the advance Q4
GDP report at 2.6% is likely to be revised lower when the prelim report hits
later this month.
In summary, the recent decline in rates has run its course for the
moment. As long as the 10yr note holds below 1.85%, I will remain bullish,
a close above that will do damage to all of the technical work. I have been
warning to be cautious, now let’s take it one day at a time. The next
event of importance is Friday’s BLS employment data with average hourly
earnings trumping the number of jobs created. At the beginning of the year I
warned that market volatility would be very high, markets remain uncertain and
are subject to wide swings as has been the case since the beginning of this
year. I do not know about you, but Job Reports has made me to jittery in
the past. Even though the rates have improved after the reports given,
even when they were good, I am advising to lock and take these great rates
unless you feel lucky – Do You Feel Lucky?
Remember, if you want to know the benefits of locking
your rate today versus floating, simply give me a call at 314-744-7806 or visit
my website at www.CallTheMoneyMan.com. I have access
to real time Wall Street data and instant market alerts with breaking news that
I monitor throughout the day to assist us on making the informed decision.
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