Mortgage Rates Flat

Mortgage rates broke from tradition today by maintaining an almost perfectly flat trajectory leading up to Thanksgiving.  This time of year is typically marked by lighter participation among the trading community whose trades ultimately dictate mortgage rates.  When fewer of them are about, volatility can increase in financial markets.  Last year, we saw a small imbalance among traders that translated to a quick move upward, then followed by a decline the following week – but not today.

We have a mixed bag of economic data today but none of it is weak enough to cause MBS to rally nor to change anyone's mind on the probability of a rate hike in December.  MBS will continue to move in a tight range of -9BPS to +9BPS unless we have an abnormally successful 7yr note auction and/or Russia does something stupid to cause a flight to quality.

Banks and mortgage companies will be closed tomorrow for the Thanksgiving holiday.  Participation varies on Friday, but the markets that underlie mortgage rate movement will be open until 1:00 PM.  That connotes some amount of risk as far as mortgage rate movement is concerned, but I do not see any important calendar events until the following week.

In summary, bond markets eased into Thanksgiving with little change, which was a surprise, but not unexpected with the feelings floating around out there.  There was some "bond unfriendly" economic data today (durable goods orders and new home sales), so rates holding their ground is at least a moral victory.  My hunch is there will not be much movement in markets until Monday, barring serious international drama.  I am still floating for the long term, but if you are closing in the short term, I would accept these rates as I do not anticipate much change until next week when the Jobs report comes out.

I want to wish everyone a very Happy Thanksgiving as I will be taking a few days off to spend with my friends and family, but if anything does warrant a post on Friday, I will be here to let you know what is going on.  Till then, forget the diets and gobble to you wobble!