Mortgage Rates Hitting Ceiling Range

Mortgage rates jumped off the pendulum and kept swinging towards the ceiling of this tight range we have been in for over a month.  Do you panic?  Tomorrow we have the FOMC meeting minutes, and I would guess some were hedging just a little bit tighter than normal.

Tomorrow's biggest source of potential volatility is the release of the minutes from the most recent Fed meeting at 1:00PM.  This gives investors a chance to examine the Fed's discussion leading up to the late July policy announcement in greater detail.  At the moment, everyone is looking for clues about the Fed's thoughts on hiking rates at the September or December meeting.  If the Minutes make it seem like September is more likely, rates could easily continue higher tomorrow.

Interest rates at the long end remain in a headlock, the 10yr (you know what it is), is still there. Fed talk reminding markets a rate increase is coming but markets ignoring it as they should. The Fed is irrelevant now until it actually does something other than talk. Not very likely a Sept rate increase is coming now. That could, but likely it will not when Janet Yellen opens the annual Jackson Hole global economic meeting of some central bankers and economists, a week from this Friday. The Fed is not likely to drop a bomb on markets without definitive leading comments and Yellen is the one that will have to do it. In the meantime, the regional Fed officials keep on keeping on and no one cares anymore.

In summary, Bond markets continued yesterday's losses today, and treasury yields hit 1.58%, near the top of the recent range.  Two things can happen from here:  we rally back towards the low end of the range, or yields break higher and rates rise.  I am hoping for the first and preparing for the second.  Bulk of my price sensitive deals are locked.  We need to tread carefully here.