Mortgage Rates Continued Lower Today

Mortgage rates continued lower today.  This morning the MBS were on the negative side while the 10yr was holding steady, but my mid-day, more consolidation and retracement which began last Friday continued again as I had anticipated. This marked the first time in more than a month where rates have moved lower 2 days in a row.  Normally, such accomplishments would be no big deal, but when we are backing down from the highest rates in more than a year, every little bit helps. 

How much we can take from it is unclear - tomorrow OPEC meets in Vienna. What OPEC announces is key to the near-term concerns over inflation that has captured markets’ thoughts. Crude down today about 4.0%, traders not expecting anything but OPEC has a way of mudding waters. No significant cuts are expected, but if there is an announcement of any cuts crude will increase temporarily and stoke the inflation concerns whether real or imagined. Beside the OPEC meeting, tomorrow weekly crude oil inventories will be released at 9:30AM. 

Tomorrow ADP kicks off the employment discussions, as expectations are for private jobs to increase 160K after 147K in October. Also we will get October personal income and spending, the November Chicago purchasing manager index, and the Fed will release its Beige Book - Fed staffs details from the 12 districts.

In summary, bonds markets started slowly today, as traders digested strong consumer confidence and GDP projections, but by mid PM had staged a moderate rally.  It is encouraging to build on yesterday's gains, but a number of us cannot proclaim the trend has changed just yet.  It is the end of the month, which often generates temporary demand for bonds.  Lots of big market moving data to end the week, month end trading, and as always watch for Central Bankers making surprise announcements both here and abroad. Love the fact we are regaining ground, I am just not ready to bank on it continuing yet.  Just be careful and not get greedy.