Mortgage Rates Higher Today

Mortgage rates were higher again today, following much stronger-than-expected economic data. There was plenty of volatility in the bond and mortgage markets this morning when the September ISM services sector index was much stronger than forecasts.  It not only reversed the weak August report but was the highest since Oct 2015. On the release the 10yr note yield jumped to 1.72% and MBS prices dropped. By 3:00 the 10yr still at 1.71% but MBS prices recovered to levels just before the release.

ADP September private jobs were thought to be up 170K, but came in at 154K and August as revised slightly lower to 175K. ADP and BLS data many times do not jibe so there was no direct reaction to the lower number - nevertheless the lower increase is likely to push down what the BLS is expected to report on Friday. 

Crude oil price now approaching $50.00 on weak inventories released this morning. The increase helped the stock market put in a good day. Production and imports slipped for a second week as refineries idled units for seasonal maintenance.

Tomorrow the only data is weekly jobless claims, the report is expected to show an increase of just 2K to 256K. Jobless claims have held nicely the last two months with little weekly changes; the 4 week averages have held in the low 260K to 256K.

Florida is about to get hit by Matthew the hurricane tomorrow. The hurricane is reported to be the largest in years to hit Florida and is expected to move up the East Coast. Pending the actual movement and damages it will eventually cause havoc in some of the economic reports through the rest of the year. No reason now to float as technicals all weak and with employment Friday we do not expect any significant improvements tomorrow. More likely prices will slip a little.

In summary, it has been a rough couple of days for rates, but hopefully we have found support at 1.73% on the benchmark 10yr treasury note.  It is now obvious the trend is NOT our friend at the moment, and that means (to me) lock sooner, not later.   Betting against the house is typically a bad move, and right now, the house says bonds are selling off.  Float at your own risk.