Mortgage rates are unchanged this morning.
The financial markets are yawning at new economic data out this morning which showed import prices rose by more than expected in April. Inflationary data is typically bad for mortgage rates but investors are still seeking a “safe-haven” in light of a deteriorating economic outlook & renewed fiscal concerns out of Europe.
The US Treasury will auction the first leg of its $72 billion debt issuance today when it offers $32 billion in 3-year notes. I am more interested in tomorrow’s $21 billion in 10-year notes since the duration of that security is closer to a mortgage-backed bond. Should the 10-year auction be well bid tomorrow it may help mortgage rates continue to decline.
However, I remain concerned about the technical trading patterns in the MBS market. Financial markets tend to work in a cyclical pattern and the chart below shows how aggressively rates have improved over the past few weeks (Click HERE to see it in your web browser). I will maintain a locking bias.
Current Outlook: locking bias