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