Mortgage Rates Steady After Wild Ride Last Week

Mortgage rates held steady today after what transpired on Thursday of last week.  Whereas markets reacted to deescalating tension in Ukraine and stronger domestic economic reports last week, the current week is off to an uneventful start. Since there was not much to ponder today with no new data being released after the three day weekend, everything stayed relatively quiet.  As such, the most prevalently quoted conforming 30yr fixed rate for best-case scenarios remains at 4.5%.

This morning the 10yr and Mortgage backed Securities (MBS) tried to gain some momentum but by 12:00 the 10yr fell back to unchanged at 2.72% after falling to 2.69% this morning, March housing data dominates this week’s releases as existing home sales have fallen off their best levels of last summer. Also tomorrow FHFA will report the housing price index for February -  old data but always gets focus. Wednesday March new home sales will be released with optimistic outlooks for an increase of 3.3% from February.

Auctions of 2yr notes will begin this week - not usually a concern for the long end of the curve - but markets have been roiled recently by Janet Yellen.  Two weeks ago her comments caused markets to anticipate an earlier than previously expected increase in the Fed funds rate, then last week she smoothed it over saying there is no hurry on the part of the Fed to begin increasing rates.   

The stock market looked precarious two weeks ago with a lot of selling – since then however the key indexes have recovered.  This week 150 companies will report earnings, so far 85 companies have reported meager results.  Still the outlook will be lowered over the next two months as the headwinds are still blowing strong for it to do such.   

In summary, not much goes on this week as far as economic data.  If you floated over the holiday weekend, I would continue to do so until tomorrow.  With no major news scheduled tomorrow morning, I think these levels are likely to hold and there is not a large risk of things worsening.  Float and look for a comeback but be ready to lock if we do not get one.