Mortgage Rates a Tad Higher Again

Mortgage rates were a tad bit higher today, but nonetheless, we have yet to see any retreat from where we have been going the past three days.

As many of you know, I have been talking about this pull back in equities but had no idea when it would occur. It will get worse and soon will become somewhat of a support for interest rates although rates are not likely to decline, just not increase quite as much. Was it Leal Brainard’s speech yesterday? Maybe a little but that was not the main driver. In the days ahead expect to hear a lot about the reasons - when this kind of move happens it roils all comments and forecasts. Remember last January with the big equity market decline? It did not last long and while I do not have much of an idea how low equity markets will fall, this one is not the same. I do not expect any major rebound for a while. The elections are now in play, the global economic outlook is slowing, inflation is not an issue and will not likely be. This is not like January or any previous selling in the equity markets where the mantra was buy the dips - that strategy worked a number of times but I do not expect that to be the case this time.

The last two days has seen weak auctions of both the 10yr and 30yr Treasuries.  What was suspected is playing out as the ECB is not much of a player right now.  A lot is going to happen in the next few day going into next week.

It continues to make most sense to anticipate further weakness until it can be ruled out.  That means favoring locking vs floating until and unless we see a big bounce toward lower rates. Now and for the next couple of weeks it will be day to day but the best strategy will be to keep locked and convince buyers to take the current levels – these rates are still some of the best rates in decades.

In summary, there were still some ugly moves today with bonds.  There was no specific cause of the move or breaking news - just momentum picked up and nobody wanted to catch the falling knife.