Mortgage Rates Trying - Relatively Unchanged

Mortgage rates remained relatively unchanged again today, even though we saw some nice movement with both the 10yr Treasury note and the MBS prices.  However, as the current week progresses, we can expect to see volatility increase thanks to the presence of more significant economic data. 

This morning’s PCE (yr/yr core 1.5%) put an additional reason not to sell bonds - inflation is not meeting what the Fed wants, ditto for the ECB. The relaxed inflation concerns, at least for the moment, add to the argument that the Fed may not increase the FF rates two times this year.  However, most are expecting that the Fed will act next week and the FOMC meeting. Even though there is some support to justify that it may not happen, that support is not making headway to dispel the what may happen next week.

Friday brings the most important economic report of the month - the Employment Situation.  This is the big "jobs report" that includes nonfarm payrolls (a measurement of how many jobs the economy is adding or losing) as well as the unemployment rate.  In modern economic history, this report has the biggest potential to move rates--at least when it comes to "economic reports."

Of course there are other considerations for interest rates and broader financial markets.  They just do not adhere to a schedule and framework of forecasts like the econ data.  We are talking about things like geopolitical risk, fiscal policy headlines, and speeches from various members of the Fed.  All of the above could come into play over the next 3 days.  At the very least, we can assume there's greater potential for rates to see some volatility.

In summary, the 10yr has fallen today to its best level since about mid-April to 2.21%..  This level has been a source of resistance that will take some motivation to break.  Following the strategy of float the highs, lock the lows, I think it would be wise to consider locking in these gain.  Those who have more time (and who are not worried about the knot in their stomach) may want to watchfully float for a few days.