Mortgage Rates Moved Again Higher

Mortgage rates moved again a little bit higher as pricing strategies remained widely variable due to market volatility.  When the trading prices of mortgage-backed-securities (MBS) changes enough during the day, we may see changes in the pricing from the various sources while others hold their ground.  Today was one of those days.

Trading levels began in decent enough ground, but bond markets (which include MBS) quickly deteriorate in the afternoon as stock markets broke higher.  At this point, every single day this week has seen rates either fail to improve or simply move higher.  By contrast, last week saw rates fall on 5 out of 5 days.

The September FOMC meeting minutes were released this afternoon, nothing was found in them that is new. Just the usual comments that the Fed wants to increase rates but the global markets will not let them and confused that inflation has not increased to 2.0% target - been low now for over three years that the Fed has been talking about it. Initially the bond market found some support but then stocks increased and the 10yr and MBS prices fell to the lowest of the day. Presently the US bond market moves with stocks, indexes higher MBS and bond prices lower.  

Treasury sold $13B of 30yr bonds this afternoon, re-opening the issue from August. Foreign demand continues to be strong.

In summary, mortgage bonds started off the day to the plus side and slid for most of the trading session only to be saved by the Fed Minutes. In my opinion mortgage bonds are over bought and ready for a reversal lower.  The risk of floating is higher than normal.  In other words if any data point or Fed speaker spooks the bond market we could see rates increase in a hurry.  Currently, if you can stomach the risk and feel the reward is out there soon, float with extreme caution – but the best bet is to lock.