Rate Update August 23, 2010
Mortgage rates are worse this morning.
Despite poor economic data last week mortgage rates failed to move any lower. This may be a technical indicator that the rally in mortgage-backed bonds (MBS’s) is coming to an end.
The US Treasury is back on the auction block this week pitching $102 billion in 2-year, 5-year, and 7-year notes. With Treasury yields lingering around all-time lows I wouldn’t be surprised to see demand weaken which would put upward pressure on mortgage rates.
The meat of the economic data will come on Wednesday and Friday this week. For now I will shift to a neutral stance given the technical trading patterns.
Current outlook: floating long-term