Mortgage Rates Shot Upward Today

OUCH!  Mortgage rates shot up higher at a real fast pace right out of the gate and never looked back following this morning’s employment data.  At the end of the day, we are back at the rates we started back in early January.  The 10yr, after teasing with its key trend support most of the week at 1.84%, broke hard this morning setting the next move to 2.00%. At the end of today the 10yr, at 1.96%, sits at its 40 day average but I do not expect that will hold for long. Through all of this short year markets have been thinking about the Fed and when Yellen will begin increasing interest rates. There was a time until this week I thought the problems in Europe and slow economic growth around the world would keep the Fed at bay until later this year, now with today’s employment report I have to change with the data - the Fed is now more likely to move by at the latest June and maybe sooner.

The next FOMC meeting is on March 17th and 18^th.  At that meeting Yellen will hold her after meeting press conference and the Fed will release its quarterly revisions to economic outlook. It is a perfect time for her to cement the message. All that of course still depends on the incoming data and what happens in the EU and China in the next five weeks. In this volatile market five weeks is a lifetime. Look for continued wide swings in both the bond and stock markets as investors and traders absorb the latest news and data.

Monday will have no data which might be good to see what transpires after the week we have had.  There will be some data that will perk some interest, but outside of the Treasury Auctions, some noise may come out with Retail Sales and Inventories. 

In summary, rates took a shot to the chin today as the strong January jobs report (and revisions to prior months) raised Fed rate hike expectations. We lost nearly ½% in loan pricing, and broke through some previously "strong" resistance.  It is possible that we could gain back some of the losses we saw today, but that is not assured after the week that just ended.  Currently, I am telling clients that never react, but act accordingly – hence my recommendation to float cautiously into Monday.  However, it will take significant data/drama to stem this tide of rising rates.

Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit my website at www.CallTheMoneyMan.com. I have access to real time Wall Street data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.