Despite the fact that mortgage-backed bonds (MBS’s)broke below an important technical level mortgage rates remain unchanged from Monday.
As I advised in Monday’s ‘rate update’ MBS’s have closed below the 200-day moving average each of the past two days. It is not uncommon for rates to move sharply higher after such an event but fortunately for mortgage rates the US 10-year treasury yield is also trading up against technical resistance and that is preventing mortgage rates from moving higher….for now.
The US 10-year treasury yield is currently trading right up against its own 200-day moving average which stands at 1.78%. Should the 10-year yield move above that level don’t be surprised to see mortgage rates increase by another .125%-25%.
This morning’s weekly jobless claims showed that the number of people filing for unemployment benefits remained relatively low compared to the past few years. Better than expected claims figures coupled with last Friday’s stronger than expected jobs report will make it hard for mortgage rates to improve from here.
I am recommending a locking bias.
Current Outlook: locking bias