Mortgage Rates Hold Their Ground

Mortgage rates managed to hold their ground in most cases today as it was relatively a quiet session as I thought it would be.  That's a refreshing turn of events considering the forceful move higher seen on Friday afternoon and yesterday.  Granted, that spike in rates followed a strong move to the lowest levels in over 5 months on Friday morning, but it was still not fun to see all of Friday's gains erased. 

There was no major data today, this week is thin on key economic measurements. Treasury sold $24B of 3yr notes this afternoon with an OK auction, the demand was slightly less than previous 3yr note auctions. US exports were the lowest in three years.  Not a direct market-mover but it is another way to look at the declining global economy as the dollar’s strength is cutting into US export business. A higher trade deficit is a drag on an economy and reduces gross domestic product. It means a country is producing fewer goods and services of its own or buying more from other nations. U.S. exports have fallen 6% compared to one year ago. If it were not for US oil production the deficit would be much higher.

Tomorrow the weekly MBA mortgage apps and later in the afternoon we will have the August consumer credit details.  That is it tomorrow. Treasury will auction $21B of 10yr notes re-opening the 10yr issued in August, that should keep MBS prices from improving in the morning.

Nothing new today as the bond market still holding slight bullish technical, but with the stock market influencing daily trading in bonds now I do not want to float. Hard to tell when the indexes will explode as they did Friday afternoon and yesterday. Earnings season is around the corner, pending how they are reported stocks will march along. Central banks keeping rates low forcing money into equities that in our view are becoming increasingly more risky.

In summary, bonds spent the day firmly back in "the range" as pricing was virtually identical to Monday's.  A few lenders repriced better mid-day, guessing those improvements were marginal.  It's somewhat disconcerting that the NFP miss was shrugged off within hours, rather than providing longer term motivation for rates to improve.  Not sure rates are headed way up/down soon, they seem quite content where they are. I'll lock most applications, if borrowers are happy with pricing.  One in the hand versus two in the bush seems appropriate here.