General Rule Here Will Be To Maintain Our Locking Bias, But Stay Tuned……

General Rule Here Will Be To Maintain Our Locking Bias, But Stay Tuned……

Mortgage bonds are slowly working their way towards the ceiling of resistance.  If we hit this level and break back down, we will confirm that we are still within a downward trend (increasing interest rates).

 

Producer Price Index (PPI), which measures inflation on the wholesale level, came in much stronger than expected for the month of October. Headline PPI was up 0.4%, which exceeded expectations of 0.1%.  On a year-over-year basis, Headline PPI moved from 2.2% up to 2.4%.  Although wholesale inflation doesn’t always get passed on to the consumer, it is still of concern.  Tomorrow morning’s Consumer Price Index (CPI) will be far more important to the direction of mortgage interest rates.  If it shows higher than anticipated levels of consumer inflation, mortgage rates will likely respond adversely.

 

The 10 Year Treasury Note yield is once again challenging the 2.385% level.  If it is able to break below this critical point, that would be helpful for mortgage interest rates.

 

With bonds nearing the top of a trading channel, the general rule would mean we should maintain our locking bias. If tomorrow’s inflation report is low, we could see bonds make a run higher.  That would be great news for mortgage interest rates.  Stay tuned…