Although note rates are unchanged today mortgage rates are priced slightly worse this morning (in order to lock in the same rate closing costs are slightly higher). After hitting all-time low levels on Monday mortgage-backed bonds (MBS’s) have suffered 3 straight days of losses which has pressured rates a little higher.
Why have rates moved higher? It’s the same old song and dance. The emotional sentiment regarding Europe is upbeat. Overnight, German Chancellor Angela Merkel pledged support for propping up European banks to help curb contagion in the event of a Greek debt default. Concurrently, an IMF official commented that the IMF may step in and help shore up the debt of struggling EU countries. The markets are moving on anticipation of a plan but specifics have yet to be announced.
Meanwhile, here at home weekly jobless claims were reported to have risen slightly last week following a steep drop the week before. Overall, the data was better than expected. Yesterday’s ADP payroll report was also better than anticipated so analysts are feeling optimistic heading into tomorrow’s all-important jobs report from the Bureau of Labor Statistics. Expectations are currently for about 60,000 new jobs and about 80,000 in the private sector. A number north of this would likely push rates higher and vice versa.
Current Outlook: neutral