Mortgage bonds have made nice gains the past two trading days and are again higher this morning. Not only is this great news, but bonds have broken out of both the downward channel they were riding as well as the sideways trading channel that developed the past month. The 10 Year Treasury Note yield has also broken beneath significant barriers and is now heading down to the 200 day moving average. These moves have helped improve mortgage rate pricing and could help fuel the summer housing market. With many holding out for an improvement with interest rates, now may be when they get back into the market.
There is still a great deal of volatility in the markets as a result of the financial devastation in Greece. Prime Minister Alexis Tsipras told the citizens of Greece that a “No” vote to the referendum in Greece would lead to a deal within 48 hours. However, that time frame has nearly past and the situation is worse than it was at the time of the vote. Rumors are circulating that ATM machines in Athens are nearly empty and that many are experiencing food shortages. Their economy has nearly come to a standstill because consumers aren’t able to access cash to pay for gas or food. This situation is getting worse minute by minute and will continue to create volatility in financial markets around the world.
There is a great deal of risk in floating. If you choose to float, do so only if you are able to watch the markets closely. Be prepared to lock as sentiment can reverse quickly.