Mortgage rates are worse this morning.
The flight-to-quality trade continues to unwind this morning as fears ease over Portuguese debt problems. Earlier today Portugal issued €1.25 billion in government debt. The sale is a sign that investors are confident in Portugal’s ability to work their way through their fiscal problems.
I don’t expect mortgage rates to improve substantially today as the US Treasury is scheduled to deliver $21 billion of 10-year Treasury notes to the markets today. The additional supply will weigh on any rallies unless the auction is met with strong demand from bidders.
Later today and tomorrow the meat of the economic calendar will be released. I expect technical trading patterns to keep us in this range for now.
Current outlook: neutral