11 Dec Good day to lock
Mortgage bonds are trading in a wide range with a good day / bad day trading pattern developed. This stock market is also trading good days for bad days. However, high levels of volatility have not been a good sign for the stock market this year. Times when volatility increased the stock market overall had a downward bias. The past few days have not been good days for stock investors. However, today is a much different story, with the S&P 500 up nearly 20 points in the first 30 minutes of the opening bell. This is pressuring mortgage interest rates higher, as well as adding pressure to the 10 Year Treasury Note.
Initial Jobless Claims for the week ending 12/6/14 were reported at 294,000. This was a bit below estimates of 295,000, and represented a drop of 3000 from last week’s 297,000 claims. This represents another week with sub-300k claims reported. As was supported with last week’s job growth figures from the BLS, the job market is clearly improving and on a strong path. Given that one of the primary roles of the Federal Reserve is to maximize employment, the current job market certainly doesn’t support interest rates as low as they have been. If it wasn’t for global economic weakness, it’s almost certain that mortgage rates would be higher than they currently are.
With bonds once again failing to break above support, and with the stock market moving higher, we see this as a good opportunity to lock in your interest rate. We need to keep an eye on the 10 Year Treasury Note today. If the yield moves up above current support, that will be very negative for mortgage interest rates. This will be heavily influenced by the continued direction of the stock market. If stocks continue to recover their recent losses, bond prices will move lower and interest rates will be pushed higher.