Rate Update January 19, 2010
Mortgage rates are improved from Friday morning (the bond market was closed yesterday for the holiday).
Higher than expected inflation numbers out of the UK are sending long-term yields higher in Europe this morning. At the opening of trading here in the US it looked as if this news would also pressure mortgage rates higher. However, mortgage-backed bonds (MBS’s) have recovered from earlier losses after Citigroup (C) reported worse than expected earnings for the 4th quarter 2009.
Looking ahead for the week, the next two days bring the most important announcements. Tomorrow the Labor Department will release the Producer Price Index (PPI) for December. Since inflation is the primary factor that drives mortgages rates this report always has the capability to impact mortgage rates.
On Thursday the Treasury will announce the size of next week’s bond auctions. Analysts are expecting $120 billion in 2-year, 5-year, and 7-year notes. Additional bond supply also has the ability to drive rates higher.
Mortgage rates have improved by about .25% from recent highs. We are going to shift our outlook to a locking stance.
Current outlook: locking