Mortgage Rate Update September 10, 2015

Mortgage rates continue to trade sideways as the financial markets wait in anticipation of next week’s Fed meeting.

The outlook for the US stock market is growing bearish.  The S&P 500 hit bottom back in March of 2009 and since then it has created annualized returns of ~20%.  Is the party about to end?  Many market analysts are shifting their outlooks.  In today’s Wall Street Journal it was reported that one portfolio manager, who manages $650 billion of investments, has his customers in nearly 90% cash positions.

David Tepper, a billionaire hedge fund manager, came out today and said, “…we’re talking about a market that should correct.”  He went on to comment that he would buy into the stock market only if stock market valuations declined by 20%.

Let’s keep in mind that no one knows with any level of certainty where the stock market is going to go next and at any given time there are a variety of opinions one can subscribe to.  That said, valuations do appear on the high side given the fact that China’s economy is struggling and the Fed is poised to begin raising short term interest rates.  If the stock market should enter into a bear market it should help mortgage rates.

Later today the US Treasury will auction $13 billion in 30-year bonds.  Over the past couple months the additional supply of long-term debt in the market has hurt mortgage rates so I wouldn’t be surprised to see yields rise modestly in the next 24 hours.  That said, I still think that borrowers can afford to float into next week.

Current Outlook: cautiously floating