Most mortgage rates are higher this morning compared to yesterday morning.
Long-term yields (including mortgage rates) inched higher yesterday following the release of two reports. The first was the minutes from the last Fed meeting which indicated that Fed officials are more and more confident that an economic recovery is under way. Although this is good news in many respects it is bad news for mortgage rates.
The second piece of information was news that China significantly cut their US Treasury holdings last month. Foreign investors create substantial demand for our debt so when a country the size of China reveals that they are divesting themselves of US debt it is big news.
There was a mixed bag of economic data out today. Of note was the Producer Price Index which reports on inflation pressures at the wholesale level of our economy. The report showed that prices grew at a faster than expected pace in January which is ordinarily bad for mortgage rates. Tomorrow the Labor Department will follow up on this report with the Consumer Price Index.
Later today the US Treasury will announce the size of their treasury auctions for next week. A larger than expected auction would push upward pressure on rates and vice versa.
At this point mortgage-backed bonds (MBS’s) are hanging on to technical support. Should prices drop below this level mortgage rates would likely move another .125%-.25% higher.
Current outlook: floating so long as technical support holds