Mortgage Rates – Not Much Change

Mortgage rates did not have much of a change today as it was another very quiet session.   June existing home sales were better than expected.  Deflation fears should be increasing, and the global stock markets may be getting the message -  the US market yet to believe it. The current decline in commodity prices, industrial commodities particularly should be troubling investors but all we see so far is a kind of shoulder shrug. Gold, copper, zinc, tin, rubber, silver, and crude oil - all are under serious selling pressure and it has been that way for a couple of weeks now.

At the beginning of the year the markets were very concerned that Europe would actually see price deflation ion their economies -inflation was dropping each month to a low of 0.4%. The ECB finally started a very aggressive QE program that did turn the inflation outlook.   China’s economy declining and there is declining growth across Europe. Here the Fed wants to increase rates this year based on its over-the-top optimism that the economy will continue to grow. Will it? The dollar continues to strengthen dampening export growth for the multi-nationals. The positive in the near term though is crude now back under $50.00 with some oil experts now actually saying in the $30s, as soon as Iran cranks up the belief is growing it will flood the markets with massive supplies they have stored in ships over the last few years.

Bond market volatility has slowed in the last week as the liquidity in the bond market is almost gone - MBS markets even worse with very little liquidity.  The Greeks parliament is supposed to vote today on the austerity plan agreed on by its prime minister last week.

Tomorrow weekly claims are expected to decrease by a tad as they have been in a very tight range now for several weeks.  We are also expecting to see a better number than last month with June leading economic indicators. 

In summary, so far we have had very little changes in interest rates so this week. The rate markets working off what global and US stock markets are doing, and this week not rallying. The 10yr, driver for mortgage rates has traded in a very tight yield range since the 15th of July. Not increasing in rates but our work still holds a bearish bias, not declining either. Late July and August are always lacking in volume, it looks that way so far this year.