Mortgage Rates - The Trend is Not Our Friend
Mortgage rates moved higher again today. Selling continued today when the markets opened as stocks faltered, but quickly came back to even levels and closed with the 10yr at 1.56%, but we saw the MBSs loose more ground as it lost another 17BPS.
No matter the minor movement the bond market is unlikely to improve now until markets get a look at the July employment report on Friday. Tomorrow ADP will report its private jobs for July, the guesses (estimate 165K from 172K in June).
Low rates aside, today's market movements are suggesting a more defensive strategy (less interested in floating). Although mortgage rates are not directly linked to 10yr Treasury yields, the latter is a good benchmark for following interest rate trends. I have been telling folks to take a look at the 10yr - and we have all been doing such keeping our fingers crossed. With 10yr yields ending above the 1.55% mark, rates are essentially threatening to move higher. The next three days bring a series of important economic reports that could act as motivation for such a move, if they turn out to be stronger than expected.
In summary, bond markets pulled back slightly, which I had hoped that the 10yr stayed below 1.52%, but it did not. Sadly, today we broke that level. While the losses are not huge, they are significant, and the trend (short term, at least) is not our friend at the moment, particularly with NFP looming on Friday. I locked several floating deals this afternoon, and will keep some of my clients knowledgeable on what the future will bring. We might see more losses before rates bounce back down.
No matter the minor movement the bond market is unlikely to improve now until markets get a look at the July employment report on Friday. Tomorrow ADP will report its private jobs for July, the guesses (estimate 165K from 172K in June).
Low rates aside, today's market movements are suggesting a more defensive strategy (less interested in floating). Although mortgage rates are not directly linked to 10yr Treasury yields, the latter is a good benchmark for following interest rate trends. I have been telling folks to take a look at the 10yr - and we have all been doing such keeping our fingers crossed. With 10yr yields ending above the 1.55% mark, rates are essentially threatening to move higher. The next three days bring a series of important economic reports that could act as motivation for such a move, if they turn out to be stronger than expected.
In summary, bond markets pulled back slightly, which I had hoped that the 10yr stayed below 1.52%, but it did not. Sadly, today we broke that level. While the losses are not huge, they are significant, and the trend (short term, at least) is not our friend at the moment, particularly with NFP looming on Friday. I locked several floating deals this afternoon, and will keep some of my clients knowledgeable on what the future will bring. We might see more losses before rates bounce back down.
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