Mortgage rates are mostly unchanged from last Thursday although pricing is a touch worse at the same note rates.
Technical trading patterns are what I am most interested in to start the week. They are also the most difficult to convey in a written format. Below is a chart of mortgage-backed bond (MBS) trading.
MBS’s are currently trading above the 25-day moving average which is a good sign for mortgage rates. And we need ot be careful because the range of MBS prices are trading in a tighter and tighter range which opens up the possibility of a “breakout”. A breakout occurs when prices move sharply higher or lower. Should MBS’s breakout lower it would be a bad signal for mortgage rates.
It’s an interesting week on the economic calendar. Tomorrow the Labor Department will release its latest reading on the Consumer Price Index (CPI). With the labor market at or near “full employment” the Fed is almost solely waiting on convincing inflationary numbers before they re-engage in rate hikes. If the CPI is +2.0% or more on a year-over-year basis then it would make it more likely that the Fed will hike in December.
Speaking of the Fed, the minutes from their last monetary policy meeting will be released on Wednesday and their comments can always move the markets.
Current Outlook: locking bias