Mortgage rates are better this morning.
On Friday we shifted our outlook to “neutral as we watch the 10yr Treasury yield”. Following last weeks announcement from Euro-zone leaders that a grand bailout plan had been agreed upon rates moved higher pushing the 10yr-Treasury yield above the important technical level of 2.30%. However, rates have sunk back below 2.30% which is promising for mortgage rates. 
The main reason for the pull back in rates is growing skepticism regarding Europe’s bailout plan. Analysts are concerned that many of the details within the grand plan will prove difficult to execute. As a result, investors are shedding exposure to “risky” economies this morning including Italy where their interest rates have risen to the highest level since the Euro-zone was formed.
For the rest of the week I expect mortgage rates to react to sentiment over Europe, the Fed’s monetary policy statement & press conference (Wednesday), and a healthy does of domestic economic news concluding with the all-important jobs report due out Friday.
Current Outlook: floating bias