Mortgage Rates Flat

Mortgage rates were again flat for today as there was not much change in the MBS prices from this morning. The 10yr note yield increased to 2.19%. For the last five sessions there has been very little movement on the 10yr and not much change in mortgage prices. Mortgage prices did attempt to improve mid-day when the stock market began losing its momentum, but when the Beige Book was released stock indexes resumed the move back to early morning levels.

The Fed’s Beige Book was generally upbeat. The Fed saying a tight labor market increased wages in some ‘pockets’. Said the economy continued to expand at a ‘moderate’ pace. It suggested certain areas of the economy are relatively strong, including the jobs market, the housing market and construction. But warned that China and the strong dollar presented obstacles to growth.

Tomorrow the ECB will meet, its last meeting was on July 16. Since the last meeting China has imploded starting with its currency devaluation, and the EU inflation rate is slowing. 

Data points tomorrow will include the weekly claims, he August ISM services sector index, and the July US trade deficit.  Tomorrow, the eve of August employment report, should be relatively quiet in the bond and mortgage markets. China’s equity markets will be closed again tomorrow and Friday.

In summary, no change in interests for over a week now - just a lot of chop. The technical work remains neutral. With employment on Friday, best to watch rather than play in this market. Bonds are waiting for Friday's jobs report to make their next move.  It is always risky to float into this report, so only those that can afford to be wrong should consider to do so.  Recent data has shown economy weakening some, so I think Friday's report will be good for rates...but this is just a guess.