Mortgage Rates a Little Lower Today

Mortgage rates were marginally lower today compared to last week, but the changes really came from the charges associated with the rate quoted.  We have seen that the rates after jumping up a little bit several weeks ago, have stayed steady now for the past week.

This morning when I wrote my report, it was looking good that the rates may head into better territory as the bellwether 10yr yield dropped to 2.32% the new resistance level after being support before it broke above it 10 days ago. Technically the 10yr is very oversold and unlike the stock market traders pay a lot of attention to technical indicators. Trading bonds is not an emotional decision as is the stock market many times. There was no rally today, as this afternoon the 10yr backed down but still did improve a little.

No direct key economic reports today. In Spain it was thought that Catalonia would declare its independence today after a referendum vote, but the Catalan Pres. instead said Catalonia won the right to be independent, but the results of the referendum will be suspended to give Madrid a chance to accept mediation.  This story has been going on for weeks now but has developed very little market reactions. Britain leaving the EU and now Spain may be splitting; in the absence of any more significant news it is something to think about.

Tomorrow there is not much data, with Weekly MBA mortgage applications and the August JOLTS job openings. Treasury will sell $24B of 3s and $20B of 10s tomorrow (the 10 at Noon). Demand for the 10yr will be a focus point.

No one bullish on interest rates, no one bearish on stock markets. Yes, there are a few but the list is short and getting shorter. I still hold out a bearish biases for rates but to expect rates to decline from these levels there has to be a major shift of beliefs in global stock markets. Looking specifically at the three US key indexes, I would not buy now - rather looking to short the market at some future time - if I live long enough. There is no denying the power of stocks now - to do so with investing has generated lots of red ink.

In general, rates have been in a holding pattern at the highest levels in more than 2 months.  The next move is important, because it will either keep 2017's narrow pattern intact or suggest a shift back toward higher rates for the first time since the beginning of the year.

In summary, bond markets posted small gains today following their Columbus Day hiatus. We'll take any progress we can get these days, but this certainly is not a rally. The rest of the week brings treasury auctions and some inflation data that's sure to interest traders. I am still in "lock early" mode until I see more than a pause in rates' upward trend.