Mortgage Rate Update August 7, 2014

Mortgage rates remain very close to the best levels of the year.

As I wrote about on Monday the economic calendar is very light this week so interest rates are responding to technical trading patterns and the stock market.  The one item of interest this week is this morning’s weekly jobless claims.  The report showed fewer Americans filing for unemployment benefits which is good news for the economy and potentially bad news for future mortgage rates.

From a technical perspective the yield on the SU 10-year treasury yield, currently at 2.439%, remains within the range I highlighted on Monday (see HERE).

The stock market is what I want to focus on this morning.  The S&P 500 is currently trading lower on geopolitical concerns.  At 1,915 the S&P is currently trading right at its 100-day moving average.  Not since 2011 has the S&P 500 traded below its 100-day moving average for a prolonged period of time.

Should the S&P 500 break below the 100-day moving average we could see stocks take a turn for the worse which would benefit interest rates.  This will be an interesting story to follow as we head towards Labor Day when many trading desks are vacant making greater volatility a real possibility.  We’ll remain floating to see if this develops further.

Current Outlook: floating