Mortgage rates remain .125%-.25% above the all-time low levels achieved a few weeks ago. They have been pressured modestly higher by an overall reduction of uncertainty which had been encouraging the “flight-to-safety” trade. Conditions in Europe have improved and the domestic economic data has been less than disastrous.
Will this trend continue? Nothing new is expected out of Europe this week as investors wait for Spain to submit a formal proposal for further bailout funds. For now things have quieted down in Europe which is putting upward pressure on US interest rates.
Here in the US we won’t get any new economic data until Wednesday when we’ll get a read on housing prices (expected to be modestly higher) as well as the Fed’s monetary policy statement. Nothing new is expected in terms of programs but the Fed’s comments can always move the interest rate markets. On Friday we’ll see the first reading on 3rd quarter GDP.
Rates will have a difficult time improving this week in the face of $99 billion in new debt supply from the US Treasury. Auctions kick-off tomorrow with $35 billion in 2-year notes.
I am shifting to a locking bias.
Current Outlook: locking