Mortgage Rates Recover A Little

Mortgage rates recovered a little bit of the heavy losses that occurred on Friday.  Not much happening today for the bond market. Through the session not much movement at all as traders and investors continue to digest the increase of jobs against the quality of the jobs and that 62.8% of workers participating in the market. Truly a continuing mixed take away from the monthly employment data. Jobs growing over 200K a month and the unemployment rate the lowest since 2007 but, struggling with the economic influence the lower paying jobs will have on continued growth.

The ECB began the long anticipated QE today, but there was no reaction to it. The ECB confirmed Monday that purchases had begun, with national central banks buying up their own governments’ debt.

There were no reports today, and not many this week until Thursday and Friday. The lack of direct-impact data is good in that it will allow investors and traders a little breathing room after the activity Friday.

The stock market rebounded today after selling on Friday. The initial reaction appeared to be that higher rates coming from the Fed may be bad for the economy - today not so much. Higher rates are not going to shoot through the roof, when the Fed actually makes the move it is not likely the central bank will begin increasing rates in any swift manner. Yellen and other Fed officials still concerned about job quality. Now that Apple is included in the DJIA index traders are probably going to have to buy more Apple to keep the average moving higher.

No change in my bearish outlook in the near term. I expect market volatility will increase as uncertainty has not lessened. Next week the FOMC meeting on Tuesday and Wednesday with Yellen’s press conference after the meeting. Not expecting much improvement in the bond and mortgage market until the meeting.

In summary, mortgage rates improved slightly today after a very rough week last week. I would float cautiously, as I think the beginning of QE for European bonds is going to help prevent our bonds and/or MBS from moving much higher from here. That said, it is only my opinion and there is no denying that the direction over the last month has been toward higher rates. Again, if you float....do so cautiously.