Mortgage rates are priced slightly better again this morning.
The financial market’s attention continues to focus on the European debt crisis and a weaker economic outlook here at home. Both story-lines are favorable for interest rates which is why rates remain at 5-month lows.
Earlier today an EU official called into question Greece’s progress on cutting the countries deficit via austerity measures. Since Greece’s bailout funds are reliant upon meeting certain targets for deficit reduction investors are concerned that Greece will have to default/ restructure its debt if it does not receive bailout funding. This uncertainty is causing investors to seek a “safe-haven” in US-denominated debt securities including mortgage-backed bonds.
In economic news weekly jobless claims were reported higher than expected and GDP growth for the 1st quarter was also reported lower than analysts had been expecting. This morning’s data falls in line with the trend of economic reports over the past month which shows that the economic recovery is being weighed down by higher gas prices which results in weaker consumer spending.
I will recommend a floating bias as rates try to break through technical resistance once again.
Current Outlook: floating