Mortgage Rates Continue Higher Today

Mortgage rates continued higher today, making it back to levels last seen in late January.  The ECB and Mario Draghi were features of the day. The expansion of the asset purchase program was greater than analysts had expected. Volatility was extreme this morning in the rate markets before calming this afternoon. During my morning report, there  was a huge move lower in MBS prices downward rapidly, then settled into a narrow orderly range the rest of the sessions.

The DJIA traded in a 300 point range today, interest rates in confusion and the ECB, wanting to weaken the euro against the dollar failed. The initial reaction sent the dollar higher in a huge currency move then in his press conference Draghi dropped another unexpected comment - saying this easing move today was likely the last move from the ECB. That blew stocks and drove US interest rates higher, the 10yr jumped to 1.94%, MBS prices dropped even more but recovered a little bit this afternoon

Treasury auctioned $12B of 30yr notes this afternoon, and again not a solid auction. All three auctions this week have been weak compared to auctions in the last two months. Crude oil lower today but still well above $30.00 with oil traders looking for $40.00, now $37.88.

Tomorrow February import and export prices. Expect more volatility tomorrow, markets here and globally now in full confusion and debate is finally increasing on the potential future effectiveness of central banks. Next week more uncertainty will keep markets unsettled. The FOMC statement will end up to be another level of confusion with Yellen and the FOMC painting a rose on a cactus.

I still expect US interest rates will be lower than where they currently trade. How it happens though is not a clear path. Global economies still soft, the US growth OK in comparison but there is not any inflation coming. Regardless of what you may read or hear inflation is not going to catch like the Fed, the ECB, the Bank of Japan and China’s Peoples Bank are saying or believing. There are still many that expect the Fed will increase the FF rate a couple of times this year but the numbers are declining and after today’s events holding that view does not have much teeth

In summary, mortgage rates have started to enter into a realm whereas we need to be concerned about the next move. Rates pushed through the recent support of 1.84%, and seemingly are forming a base of resistance at those same levels. Optimism is not a strategy, nor is fear, therefore my advice is to stay put over the next few trading sessions and let the trade unwind as data comes back into the picture next week. As always, locking is the safe bet, if you are happy with your rate you should always lock it in.