Fixed rate mortgages are unchanged this morning while conforming ARM’s are inexplicably worse.
In Europe the Spanish Government was forced to pay record EU-era yields on their latest round of 10-year notes which were auctioned earlier today. The average yield at the auction was 6.975%which has analysts concerned because Greece, Portugal, and Ireland all had to seek bailouts when yields on their government 10-year notes hit 7.00%.
This should be promoting a “flight-to-safety” into US-denominated debt but mortgage rates are not able to break below current levels. Analysts are also starting to pay close attention to French bond yields which are widening relative to Germany’s.
In domestic economic news weekly jobless claims dropped to the lowest level since April raising hopes that the jobs market will improve. In a separate report, the Commerce Department released figures showing that housing starts fell by less than analysts had expected last month. Lastly, a reading on manufacturing activity in the Philadelphia Federal Reserve Region showed that current conditions were softer than expected but that the outlook for the future was optimistic.
There were a lot of headlines today but in the end they are not having much of an impact on rates. I will remain in a neutral position.
Current Outlook: neutral