Be careful if you’re gambling….

After hitting the highs of the past 21 months last week, mortgage bonds were forced sharply lower.  This means that if you secured your mortgage interest rate late last week you made a very wise decision.  Bonds have since formed a very negative chart pattern and have broken beneath multiple layers of support.  This has pushed mortgage interest rates 1/8% higher in just a couple quick days.  Further, the 10 Year Treasury Note Yield has breached the critical 1.78% barrier.  This is also highly negative for the near term direction of mortgage rates.

Oil prices spiked higher the past few days, with Brent oil surging up to $58 per barrel.  This represents a 24% increase from the lows obtained a few weeks ago.  However, prices are still down more than 50% since June.  The reason for the spike higher is likely due to the oil industry hitting critical levels of disparity.  With US drillers idling 94 rigs last week alone, the impact to our overall economy from low oil prices could be felt much harder than the benefit we feel from short term enjoyment at the gas pumps.  The long term implications of an ailing oil industry can be devastating to all Americans eventually.

With mortgage bonds spiraling lower, we will continue to maintain our locking bias.  Hopefully, those able to secure an interest rate did so last week.  If not, there is likely more volatility ahead.  With the Bureau of Labor Statistics reporting January’s job growth numbers on Friday, the markets will likely be unsettled until the announcement is made.  Be careful when gambling on the market and the direction of interest rates.  As we have experienced the past few days, sentiment can change quickly.