Mortgage Rates Generally Quiet

Generally quiet today ahead of a lot of key economic data tomorrow and Wednesday, and it is a holiday week. More Fedspeak today – but of course nothing but the same old rhetoric.

October existing home sales were weaker than expected this morning. Inventory levels are declining taking away potential sales, but prices did increase over 5% over last year. 

The 10yr note, driver for MBSs opened higher in yield this morning, but as the day wore on, it closed at 2.25% with MBSs flat.  Tomorrow markets get the preliminary Q3 GDP at 7:30, the second reading and includes a lot of information unavailable in the advance report. The Sept Case/Shiller 20 city home price index at 8:00, expected to show a price gain.  At 9:00 the November consumer confidence index for November, confidence is also thought to be higher from October readings.  At Noon, the Treasury will auction $35B of 5yr notes.

The last three weeks have not seen any significant movement in interest rates, with the momentum oscillators mixed now, some still positive others not yet. The wider outlook remains negative with the markets believing the Fed will increase rates for the first time in years. Will the Fed move in December? Depends on the November employment report a week from this Friday. Lot of discussion and comments from numerous Fed officials but looking at the long end of the curve (MBSs) there has not been any major selling in the last two weeks. I am not comfortable floating now, we have too many conflicting technical reads and until the November employment report is released it is not likely that interest rates have much momentum to decline.

In summary, after a weak opening, MBS are following treasuries to their best levels of the day.   There is just too much volatility with the market being flat and not making a move with better rates after the spike.  Floating seems to be the best bet, but only if you can stomach the worst of it.