Rate Update June 3, 2010
Mortgage rates are priced slightly worse this morning.
Positive economic data and easing concerns over the EU debt crisis is helping stocks and hurting interest rates. This morning we got a fresh round of economic data which was mostly encouraging. And with no new headlines out of Europe investors are unwinding their “flight-to-safety” positions which has helped keep rates low over the past few weeks.
Will the trend continue? A lot will have to do with tomorrow’s employment report. Analysts are expecting 515,000 new jobs to have been created in May; 425,000 of which are temporary workers hired to work for the US census. The markets will respond to the number of private sector jobs generated. If the private sector number is good then mortgage rates will move higher and vice versa regardless of the headline figure.
From a technical perspective mortgage rates will be sensitive to tomorrow’s report. Mortgage-backed bond (MBS) prices are currently trading right up against technical support so should prices break below this level it would likely mean higher rates in the days to come.
Current outlook: locking bias