Mortgage Rate Update May 11, 2011

Posted on by Evan in Rate Update

Mortgage rates are priced worse this morning.

Technical trading patterns finally took hold yesterday as mortgage-backed bond (MBS) prices met technical resistance at the 200-day moving average (see chart below & CLICK HERE to learn more about technical trading patterns).

All attention in the interest rate market is focused on this afternoon’s 10-year Treasury note auction.  The US Treasury will auction $24 billion in 10-year notes today and $16 billion in 30-year bonds tomorrow.  With yields dropping over the past few weeks there is concern that demand for these auctions will be weak which would put upward pressure on rates.  However, other analysts believe that demand should be strong since the economic outlook has deteriorated.

I will maintain a locking bias as I believe the risks of rates worsening outweigh the possibility of them improving further.

Current Outlook: locking bias