Mortgage Rates Still Moving Higher From Yesterday's News

Mortgage rates are moving sideways to slightly higher so far today.  After what was a surprised ADP report, the market was not kind to the bonds that affect mortgage rates as it was a very volatile day.  Today, even though we are seeing a little of more of the same, all that is really happening is the traders are positioning themselves for tomorrow’s big NFP Report. 

This morning, the February Challenger Grey Job Cut report showed that announced corporate layoffs dropped from 45,934 in January down to 36,957 in February which is a positive trend line.  Initial Weekly Jobless Claims were very close to market expectations, with the more closely watched 4-week moving average remained near historic lows.  When it comes to inflation, Import Prices jumped up 4.6% in a YOY basis in February which is at an accelerated level from January's pace of 3.7%. Export Prices were up 3.1% vs last month’s pace of 2.3%.  Still left for today, at noon we have the most important Treasury auction of the week with our 30yr Treasury bond.

European Central Bank left their key interest rate unchanged and did not change the level of their bond purchasing program. ECB President Draghi said the "balance of risks to growth has improved" and noted that The ECB had "removed reference to signal a sense of urgency." This combined with the removal of references to the use of all instruments has sparked EUR strength and Bund weakness.

At  11:00AM, the 10yr is at 2.58% and the MBSs are in negative territory at – 9BPS.

Mortgage rates are likely to be under continued pressure today with the solid jobs numbers and the comments from Draghi. Look for continue average to high volatility today.  Tomorrow's Average Hourly wages report is extremely important to help determine if the Fed will move rates next week - which I anticipate will happen.  It would take a shockingly soft report to keep the Fed from moving and that is highly unlikely now. More important than the February data is how the FOMC will frame the policy statement and how Janet Yellen handles her press conference after the policy statement release.