Rate Update June 21, 2010
Mortgage rates are priced slightly worse this morning.
The headline drawing attention in the financial news this morning is China’s announcement that they would allow their currency, the yuan, to strengthen against the US Dollar. For years the Chinese have artificially subsidized the US dollar to keep Chinese exports strong. Their announcement this morning will eventually put upward pressure on rates. Click HERE to understand why.
On this news stocks are trading higher around the world which is pressuring rates higher.
Looking ahead the US Treasury is set to auction $108 billion in 2-year, 5-year, and 7-year notes this week. Demand for US assets has been strong the past few auction weeks but in the light of this announcement we’ll have to watch these closely.
Also, the Fed will hold a 2-day monetary policy meeting beginning tomorrow. Their post-meeting statement scheduled for Wednesday can always shift the markets.
Current outlook: locking bias