Mortgage Rates Improved Again Today

Mortgage rates put in a more mixed performance today, owing to volatility in underlying markets.  The day began well, following overnight improvements in global bond markets.  To oversimplify, investors were guarding against risk by selling stocks and buying bonds.  The bond market started nicely this morning but gave up a lot when the stock indexes swung from strong selling (-200 on to buying this afternoon). Have no idea why the stock market, which was looking very soft this morning, changed direction this afternoon.

Treasury sold $24B of 3yr notes this afternoon, and the demand was lukewarm. The 10yr broke its resistance at 2.30% this morning then dropped to 2.19% at one point. MBSs were up as much as 50BPS, but neither held on and ended the day at 2.26% and a positive 15BPS.

Greece was supposed to have a new package ready today for creditors but they did not as they are talking tomorrow. Reports that "16 of the other 18 countries in the euro-zone are in favor of letting Greece leave the euro-zone" according to sources in Brussels. Creditors are still sounding reluctant to bend much.

Tomorrow maybe more definitive news form Europe. The FOMC minutes from the June meeting at 1:00 tomorrow afternoon. Treasury will sell $21B of 10yr notes re-opening the 10yr issued in May.

The bond and mortgage markets, along with stocks had one of the most volatile trades we have had in months. Every key market flipped from morning levels. I wanted to float this morning but did not appreciate the reversal this afternoon.

In summary, mortgage rates improved again today.  There is no doubt that this could have turned out to be a great day to lock, specifically, if these improvements turn out to be short lived and rates rise, again. That said, I would cautiously float into tomorrow morning. There is not one singular event that is potentially leading to these improvements, in fact there are several economic issues leading to this good fortune in rates. Float to see if we continue this break lower, but be ready to lock tomorrow morning if this price action is not confirmed.