Mortgage Rates Bounced Back A Bit

Mortgage rates bounced back ever-so-slightly today, ultimately doing very little to erase the damage done so far this week.  Comments from the Greek government that it will not make the payment due tomorrow but will ‘bundle’ all the payments due this month and make one payment at the end of the month according to the WSJ this afternoon. Apparently the IMF had suggested that option to Greece to alleviate the payment tomorrow. As noted in my recent comments, this Greek mess is nowhere being resolved. Greece cannot pay that amount unless it gets more bailout money from the IMF. The IMF and Germany talk tough but each time it gets down to the wire everyone blinks. Should bond holders return to safe haven buying? The bond market saying enough, no need for safety until the end is near - that may be a year away regardless of the rhetoric flowing.

Tomorrow’s jobs report is particularly interesting because it will certainly factor into the Fed's decision on when to raise rates - something they seem intent on doing in 2015 which I have said time and time again that it will not happen.  The stronger the jobs data, there are a number of people saying the sooner markets will see the hike happening.  While the Fed Funds Rate does not directly dictate mortgage rates, they are interconnected enough that mortgage rates have seen upward pressure when the market sees the Fed rate hike timeline accelerating.   The point here is that tomorrow is very risky.  Things could improve tremendously, but there is at least an equal risk that rates surge to new highs for the year.

Interest rate markets continue to be volatile, that will not lessen anytime soon. For all the ink and verbiage markets are confused. No sense in trying to be the first one to make any case, so just go with how markets are trading.

In summary, it has been an interesting, if not painful week so far for rates. We have had a slew of data, press conferences and expert opinions all week and they have led to a pretty good selloff in the bond markets. Today we got some of those losses back. But tomorrow’s Jobs Report is a huge wild card. The bleeding may have stopped right now, and no matter what the number is tomorrow, we are still in for a bumpy ride – the last three months have proven such and huge speculation will compound the number as the Fed Rate increase will be kicked around even more from what the reports says.