Mortgage Rates Trying to Take Off

Mortgage rates held steady today, keeping them in line with the best levels in just over a month. This morning ADP July jobs were about right where it was expected, +178K but the June revision from 158K originally to 191K points to how volatile ADP data has been recently.

The DJIA flirted with 22K all day (and it made it in the final hour), the other two indexes marked time (22K has no significance other than psychological).  Money remains invested in safe treasuries even with this over-the-top optimism in equities. Greenspan says it’s the bond market in a bubble, not stocks. Make your choice. It really is stocks not bonds, Greenspan must have stayed in his bathtub a little too long. More and more each day pundits are increasing their view that the equity markets are increasingly over-baked - traders on the options markets beginning to actually talk about the dilemma.

The bellwether 10yr holding but not seeing sizeable new buying, just no selling as the yield at 2.26% is close to the major technical resistance at 2.23% - a break below that will set a move to 2.10% and pending how stock indexes react when the selling begins could take the 10yr down to 2.00%. No one wants to lead the parade out of equities and take the wrath from investors so far. Getting close and everyone has their finger on the trigger when the ball begins rolling.

The reason originators should pay close attention now it that any client that has voiced any interest in re-financing should be put on alert. Do not act now, just get them primed. Rates are close to moving lower as stocks are close to finally entering a pullback. The initial move is going to swift, then stabilize and some new buying tries to get in on the slippage. The rest of this year is set for a big increase in market volatility. I will not anticipate by selling too soon, but when is occurs the momentum and market volatility will explode in comparison to what this year has been.  

In summary, bonds have managed to hold onto all the recent gains of the past couple of days, as traders prepped for Friday's NFP Jobs Report.  It is common to see bonds weaken heading into the report.   With bonds so far today, unable to make new lows, most of my floating clients are taking advantage of the improved rates and locking – but I am going to wait to see what happens tomorrow.