Cautious Floating Bias

The Initial Jobless Claims report and Housing starts were the positive surprises of the morning.  335,000 has been the lowest weekly claims number seen in 5 years.  The Philly Fed Index came in at -5.8, and well below estimates of 5.2.  Investors appear to be ignoring the negative as the Dow is up by almost 70 points at the moment.  The broader S&P 500 hit another high and continues to be pulled towards its all time high of 1565 from October, 2007.  Stocks are pressuring mortgage bonds lower, which have traded in a downward channel since early December, pushing interest rates higher today.  The stock market seems intent on hitting all time highs, but Fed buying should support mortgage bonds and limit rates from moving significantly higher.  We will start new transactions with a cautious floating bias.


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