Mortgage Rates Sideways - Still in Narrow Range

Mortgage rates are moving sideways as we are seeing the ripples of the better than expected July employment report on Friday continue this morning.  About 60K more jobs in July than were anticipated and a 0.3% increase in average hourly earnings, the bond and mortgage reactions reversed the improvements from last Thursday.  Overall the reactions in the bond markets were not that severe.

At 11:00AM this morning, we have seen a slight turn from early this morning as the 10yr has lowered to 2.25% and MBSs after being in negative territory, are now positive.  But, we are still holding in its narrow range that is now going on to four weeks with little change, and the same in mortgage rates.

This week’s key economic data hits later Wednesday, Thursday, and Friday. In the meantime, Treasury will conduct its quarterly refunding issuing new 10yr notes and 30yr bonds (see calendar). Crude oil this morning lower after increasing about $5.00/barrel recently oil hit $50.00 early last week where our technical pivot resides, now backing down somewhat. OPEC and non-OPEC technical committee are meeting in Abu Dhabi today and tomorrow to discuss ways to boost compliance with the deal. Still, the overriding issue is simple; as noted numerous times, there is more oil than demand and most oil producing countries rely on oil sales to fund their economies.

I just want to note that I have not talked about ARMS in any of my reports as they account for 14% of the market according to recent data. Interest rates are expected to increase, and with that over time will add to ARM mortgages becoming more of an issue for folks to contend with on their financing.  I am sure more of this will come up in future reports.

Still, all technical work remains neutral - neither bullish or bearish as long as the 10yr stays between 2.22% and 2.32%, the momentum will remain flat.