Mortgage Rates Continued Higher Today

Mortgage rates continued higher today as markets reacted to news that North Korea would tactically abstain from launching nuclear weapons at Guam because it was having such a good time watching the "foolish and stupid conduct of the Yankees."  With July retail sales, NHAB housing market index, and the NY August Empire State manufacturing index – each of these reports blew the doors off this morning. The 10yr closed at 2.27% and MBSs settled in at a negative 16BPS.

Tomorrow July housing starts and building permits - (starts expected +0.9% to 1225K from 1215K in June, permits +0.7% to 1246K from 1245K. In the afternoon the minutes from the July FOMC minutes will be released. The minutes will be scrutinized for any additional clues that were not noted in the policy statement after the meeting three weeks ago.  

The stock market did not do too well today after strong data - the data of course is hindsight but with the current optimism we would have expected a little better. With the geo-political tensions lessening the safe movements have tapered. The link between the stock market and bond market remains, given no current war fears and with FOMC minutes tomorrow and Jackson Hole coming on quickly unless the stock market buckles there is not much to expect for lower rates in the near term. That said the technicals are still holding but the string is weakening.

In summary, the bond markets weakened this afternoon while staying within recent ranges.  Today's movement was not a trend, but bears watching if it continues.  I have been preaching "lock sooner rather than later" in the absence of meaningful direction, and that's still my attitude.  My pipeline is locked, with the exception of a few new loans closing well over 30 days from now.