Mortgage Rate Update December 8, 2014

Mortgage rates are modestly worse following Friday’s better than expected jobs report.

In case you missed it the all-important jobs report released last week showed that the US economy added 321,000 new jobs in November.  This is the strongest reading of the year and well above expectations.  Good news for the economy is often a bad sign for mortgage rates.

Fortunately things did not get out of hand on Friday despite the strong reading and today mortgage rates are trying to reverse lower thanks to weakness in the stock market.  US stocks are trading lower on weak economic data out of Germany and Japan.

Looking ahead this week the economic calendar is fairly light.  Therefore, we expect interest rates to take direction from the stock market as well as technical trading patterns.

After rallying by over 10% from late October to late November the US stock market has been stagnant for the past week and a half.  Many analysts still believe the stock market is overdue for a correction.  If and when that takes place mortgage rates should benefit.

However, the yield on the US 10-year treasury note is currently trading up against overhead technical resistance at 2.30%.  If the yield on the 10-year breaks above this level I would expect mortgage rates to increase by ~.125%.

For now I will remain in a floating position but may have to shift that prior to the next ‘rate update’ posting if the markets begin to move in the wrong direction.

Current Outlook: cautiously floating