Mortgage rates have worsened modestly this week. A look at the yield on the US 10-year treasury shows an increase from ~1.55% in late September to ~1.75% today. During that time mortgage rates have increased by ~.125%.
This morning interest rates have stabilized and are trying to reverse lower as stocks slide. US stocks are trading lower on news that Chinese exports declined 10% year-over-year. Mortgage rates tend to benefit when stocks falter.
In September 2015 the Fed was widely expected to raise short-term interest rates but ended up delaying the action after China released weaker than expected economic data. Might today’s release cause the Fed to delay again? At this point I think not but we’ll have to see how the markets respond in the coming weeks.
From a technical perspective the pattern shown in the chart above leads me to believe we could see yields continue to decline. I am going to recommend a floating stance.
Current Outlook: floating