Blog Archives

Mortgage Rates Tentatively Lower

Mortgage rates moved slightly lower again today.  The most prevalently quoted rates remain between 4.5 and 4.625 percent for ideal, conforming 30yr Fixed scenarios with the improvements being seen in the form of lower costs. Today’s rates fall somewhere between last Wednesday’s and Tuesday’s for almost all lenders.

There were no significant events on today’s calendar offering motivation for the bond markets that underlie mortgage rates.  Volatility was absent for both US Treasuries, which provide a good sense of longer term trends, as well as Mortgage-Backed-Securities (MBS), which most directly affect lenders’ rate sheets.  Despite the modest improvements, both Treasuries and MBS looked to be leveling-off more than they were continuing into stronger territory.

The week will continue to be light in terms of scheduled events and investors’ focus is already mostly turned toward next week’s FOMC Announcement.  That’s the Fed policy statement at which some market participants think the Fed could move to reduce asset purchases.  Economists are fairly divided on that, however, with about half seeing it March and the other half seeing the reduction coming some time between now and then.

Only 1 in 7 surveyed think it will happen next week, but for what it’s worth, that’s not much less than those who DID NOT see it happening in September.  Bottom line: it probably won’t happen in December, but the fact that it might is keeping markets on their toes.  The net effect on rates is that they’ll be hesitant to make any major moves between now and then.  Surprisingly strong or weak economic data on Thursday morning could be a bit of an exception.

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MBS MID-DAY: Cautious but Meaningful Rally After ADP Data

Overnight trading deposited bond markets in just slightly better territory to start the domestic session.  Right off the bat, the ADP employment numbers had a positive effect on prices, but there was a strong push back from 8:30am to 9:00am for no overt reason.  Covert reasons abound, however, as traders increasingly show their hands regarding resistance around 2.47-2.48% in 10yr yields.

 

In other words, 10yr yields have continually shied away from breaking any lower than that, though MBS have increasingly outpeformed in the meantime.  Whereas 10’s are no lower than overnight lows, MBS are at their best levels since June.  The afternoon events could draw out some more conviction in Treasuries (meaning either a firmer bounce against recent yield floors or finally breaking them).