Mortgage Rate Update December 27, 2010

Mortgage rates are mostly unchanged today.

China surprised the markets on Christmas Day by raising short-term interest rates.  As US policymakers grapple with ways to stimulate the economy without concern for inflation our Chinese counterparts are looking for ways to curb inflation by applying the breaks on the economy.  The announcement has bond investors concerned about potential inflationary implications here at home.

The economic calendar is light this week. Trading volumes are expected to be low thanks to the holidays and weather on the east coast.  Fewer market participants can cause increased volatility.

The big news this week for interest rates is expected to be the US Treasury auctioning $99 billion in treasuries.  The auctions kick-off today with $35 billion in 2-year notes.

Current outlook: neutral