Mortgage Rates Rose Quickly Today

Mortgage rates rose rather quickly today as more intraday volatility today was prevalent in both the MBS and treasury markets. MBSs were driven by the 10yr Treasury note early this morning at 2.25%, then declined to 2.22% before running back to above the technical support at 2.32%.

At Noon Treasury released the data on the $13B 30yr bond auction, and it did not meet with much demand compared to previous 30yr auctions, which was the key for treasury price declines taking MBSs with them.

The stock market was strong this morning on news that China’s stock markets improved. Most of the movement in the US markets over the last few weeks is generated by what occurs in Asia and Europe. Domestic data this week has not revealed anything of substance.

The stock indexes made their highs on the open this morning then slowly faded, although ending higher. Greece is still on center stage and China slowly gaining ground for attention. According to the latest skinny, about the time we hit the send button for this tome Greece is supposed to reveal its newest plan and the parliament is supposed to vote on it later this evening. Do not hold your breath, most time frames are just guidelines.

The only report due out tomorrow; May wholesale inventories, normally it attracts attention but not tomorrow with Asia and Europe all that markets are concerned with at the moment. Greece has to submit its ‘plan’ by mid-night to creditors. The upper summit (a higher category than just a summit?) on Sunday - the leaders of all 28 European Union countries will meet in Brussels.  Many expect a deal, and if you do you are very likely to be disappointed. I will leave this with two questions one should continue ask - who lent Greece all that money? The IMF, the ESA fund, the ECB. How much debt was created when Greece hosted the Olympics?

The technicals cannot be relied on now, too volatile. The 10yr at 2.32% back above 2.30% support.

In summary, the stock markets and Greek drama giveth, and taketh away, and today was the take away. Bonds gave up yesterday's gains and more. We are essentially back in our prior range now, not the end of the world, but I certainly did NOT confirm a lower rate trend. Conservative borrowers should lock early if happy with their pricing. Those willing to roll the dice until this weekend's Greek outcome could profit (or not) by floating.