Mortgage rates are worse today compared to Monday morning. Interest rates in the US and Germany closed at their worst levels in five months yesterday.
As I highlighted last Thursday the yield on the US 10-year treasury note is still hovering near the 2.25% level. The last two times yields have drifted to this level they have improved in the week following. We are still waiting to see if this pattern will repeat this time around.
Yesterday’s Retail Sales report showed continued stagnation on the part of US consumers. Overall sales have been flat or slightly lower for four of the past five months. What about inflation? This morning’s Producer Price Index (PPI) showed inflation at the wholesale level of the US economy is still very low. At this point it appears the Fed has little to worry about.
The meat of the economic calendar has been released for this week. I expect mortgage rates to react to technical trading patterns the through tomorrow. Thus far this morning mortgage-backed bonds are trading favorably so I will recommend floating at least into tomorrow.
Current Outlook: locking bias