Mortgage Rates Mixed Today

Mortgage rates were decidedly mixed today, as we saw some better pricing today but still unable to break very key technical resistance levels for treasuries and MBSs. This morning February personal income and spending was better than anticipated, but the revisions overshadowed that good news. So far this year January and February spending has been weaker than most economists were forecasting. Two weeks ago February retail sales were soft. Data released this month has caused estimates for Q1 GDP to be revised lower.

Treasury sold $26B of 2yr notes this afternoon. The high yield was the highest of the year but that does not mean a lot since this is just the third 2yr auction, and the yield was right at the rate of the 2yr trading this morning prior to the auction.

This afternoon a shot was fired at the Capitol Visitors Center, and there was a huge lock down around Washington but the incident did not escalate. The shooter was captured. The markets almost stopped trading for a few minutes then got back to business with no noticeable reaction to the event. No safety movement, in fact this afternoon MBS prices slowly backed down from their best levels about noon.  The 10yr note at about noon was at 1.87%, but settled in for the day at 1.89%.  Even though the intraday movement has been very volatile, the trading in MBSs and treasuries for the last seven sessions are tied tight in very narrow ranges.

Equity and fixed income markets today waiting for Janet Yellen’s speech at 10:30 tomorrow at the Economics Club of NY. Tomorrow the January Case/Shiller 20 city price index is expected along with the March consumer confidence index.

No breaking below 1.85% for the 10yr note keeps MBSs and the 10yr itself in a very tight range and keeps all of the technicals negative. Yellen tomorrow is not likely to say anything that will break the 10yr down, March employment on Friday and Yellen’s speech combined together should cause a big move in the fixed income markets; the direction when it happens will be quick with a couple of days of big movement in the direction of the break out between 1.94% and that cement wall at 1.85%. MBSs will follow as they always do.

In summary, I have been cautiously floating as Bonds are enjoying a nice rally, but the rates are not being passed down by the banks.  I know this is Jobs Week, and I hate to float during this volatile time, but if you have the stomach for it, continue but have your hand on the trigger, especially in the morning.