Mortgage Rates Showing No Change

Mortgage rates are showing no change thus far this morning as Treasury markets opened lower in price this morning with the 10yr note yield hitting 2.30% but is currently at 2.29% at 10:00AM.  MBSs are even after being in negative territory most of the morning.  This is holiday week with a lot of economic data between now and Wednesday and Treasury will auction $90B of 2s, 5s and 7s. Wednesday this week is packed with data and auctions.

No new terrorist events over the weekend but security is tight all through Europe. Belgian is considered where the terrorists began their planning - police patrolled the streets of Brussels as the city’s lockdown continued for a third day. Belgian prosecutors said they had arrested five people in new raids, bringing the total detained since Sunday to 21. The Paris attacks a week ago last Friday surprisingly did not lead to market panics or any new flights to safety in US treasuries.

The only report today, October existing home sales.  Not a good report, but recently that is what we are seeing - some good data, some not as good as expectations. No immediate reaction to the weaker report.

There are many key economic reports this week, crammed in two days, Tuesday and Wednesday. Usually this week has little trading as many take the week off, this week with the data not as likely traders will be as passive as usual in a holiday week. Last week had interday volatility, Friday particularly experienced declines in MBSs and treasuries, and the week on the whole however was unchanged in treasuries and just a fractional increase in MBS prices for the entire week. Last week the news was about the Paris attacks.  There was no meaningful reaction to the increased concerns of terrorist events. US stocks rallied and rate markets did not get any movement into safety of US treasuries. I still have a bearish view for interest rates, both technically as well as fundamentally with the Fed primed to move on December 16th. I expected a short-covering improvement after the recent increase in rates, and we got a little but not what we were expecting. Even the global concerns about terrorists did not move the bond market. No significant improvements.

There is not going to be much improvement in the next few days, but the best move is to lock short term and float into next week for longer term closings.