Mortgage Rate Update November 12, 2013

Mortgage rates are worse following Friday’s stronger than expected jobs report.  In case you missed it, the all-important employment report for October showed that the US economy added 204,000 new jobs.  The markets had been expecting a figure of closer to 120,000.

The stronger than expected jobs report has renewed speculation that the Fed will announce a plan to taper quantitative easing (QE) at its next monetary policy meeting in December.  My personal belief is that the Fed is more likely to wait until next quarter to take any decisive action.  The next all-important jobs report is scheduled for Friday, December 6th.

Speaking of the Fed, Janet Yellen will face lawmakers this Thursday for her confirmation hearing.

 She is widely expected to pass this test but her comments during the process could impact the markets in the meantime.  Yellen has a reputation of being a “dove” when it comes to monetary policy, meaning that she is a supporter of easing money policies like QE.  In order to appease her opponents I could see her making comments that sound “hawkish” (opposite of “dovish”) which could push mortgage rates even higher.

In addition, the US Treasury is scheduled to auction $70 billion in fresh debt supply starting later today.  The additional supply of debt could make it hard for mortgage rates to improve.  I am going to shift to a locking position in order to protect current positions.

Current Outlook: locking bias