Mortgage Rates Get Back Losses

Mortgage rates did today what they did negatively yesterday.  In other words, what we lost we got back and we are starting all over again tomorrow.  The economic news this morning was anticipated with no big shocks, except that what came out of the NAR report, with pending home sales coming in twice as high as what was anticipated.

The Treasury auctions have continued today with the 7yr showing some very positive demand compared to previous months.  More Fedspeak today as we heard from Boston Fed’s Rosengren, “three more increases should be considered, June, Sept, and December.”  But of course he added the comment that made his remark mute - unless incoming data is weak. So he remains data dependent and the remark has little predictive value. The Fed does not make the call for higher rates, the markets do and unless markets are looking for three, two, five or more the Fed will not do anything different.

The UK made it official, invoking Article 50 of the Lisbon Treaty that now starts the 24-month clock ticking. Nothing new or market-changing, but over the course of the unwind we can expect a lot of tugs and pulls. The EU talking tough, the Brits relentless moving on.   

The last six sessions have resulted in little to no change in interest rates, while the stock market is moving up and down filling in holes here and there.  Unless stocks roll over for more than a day, interest rates have little clear air to move lower. The incoming data this week has been sparse and what there was (consumer confidence) got ink and media gasps but traders are not as impressed with the consumer readings as media is.

In summary, bonds bounced back today, recouping the lion's share of yesterday's losses.  Treasury yields are establishing a range from 2.38% to 2.42%, and are now approaching the bottom of that range.  I do not know where we go from here, but glad we halted the sell-off in a day. Since we are near treasuries' recent low yields, floating borrowers need to be careful here.  I have stated this many times - Pigs Get Fat, Hogs Get Slaughtered!