Mortgage Rates Have Modest Gains

Mortgage rates managed to make modest gains today, which I said this morning was a welcome development after 10 straight days of higher rates.  Even with this nice bounce today, the 10yr stopped its minor gain at its new technical resistance at 1.74%.

China’s economy continues to contract sending global stocks lower today. Chinese data showed a sharp decline in exports, reviving concerns about the health of the world's second-biggest economy.

This afternoon Treasury sold $12B of 30yr bonds re-opening the issue of August. After tepid 3yr and 10yr auctions yesterday, today it was a solid auction and supported the long end of the curve.  

The equity market on a wild trade today, at one point the DJIA down 184 recovered most all of the loss by the close. US stocks started lower this morning on weak economic data from China.

Tomorrow the markets will get a few important data points with September retail sales, September PPI, August Business Inventories, and October mid-month U. of Michigan consumer sentiment index.  Data is important but the headline tomorrow is Janet Yellen’s speech in Boston at 11:30AM.

Recent trade in crude oil has the price chopping back and forth at $50.00. Today crude slightly over $50.00. After a sustained increase in the dollar’s value, today the dollar lost a little ground.  Many believe there is more to go for the dollar strengthening with the Fed poised to increase rates in December, but there is a long way until then.

Even though the bond and mortgage markets improved today but that does not change the bearish outlook. The stock market rocked early on China data and the consequential declines Europe and Asian markets, recovered most al of the morning weakness.

In summary, Bonds rebounded slightly today, posting only their 2nd day of gains since September 29th as auction demand for 10yr treasuries exceeded expectations.  I am not ready to call one positive day an end to rates' upward trend, let's see about 3 days before we get too excited.  While it may be less imperative to lock ASAP, it is certainly far too early to expect further pricing improvements.  Float with caution, if at all.