Happy Holidays!

Yesterday was a tough day for mortgage interest rates as the markets realized that a 5% Gross Domestic Product growth rate is not consistent with such a low interest rate environment.  As a result, mortgage interest rates moved about 1/8% higher.  The stock market is again pushing strong today after setting new record highs yesterday.  Stocks have been on an unstoppable run higher the past week and a half, and have lived up to the historical trend of performing well over the week of Christmas.  This has battered the bond market, with both mortgage bonds and the 10 Year Treasury Note taking it on the chin.  Once the yield on the 10 YTN surpassed the critical 2.22% level that we identified, the yield shot passed both the 25 and 50 day moving averages.

Initial Jobless Claims for last week were reported at only 280,000.  This is the lowest level in 7 weeks, causing many TV Pundits to claim December as a blockbuster month for job growth.  We will see the reality on the first Friday of 2015 when the Bureau of Labor Statistics releases their estimate of job growth for the month of December.  Since many employers wait until after Christmas to initiate layoffs, we feel this number is subdued as a result.  January will be a month where many seasonal employees will be let go, so we may be in for a couple months of volatility in the job market.  The cold months of January and February can be brittle for many US employers.  We all remember the cold months of 2014 and the weakness it created in the US economy.  History may again repeat itself in 2015.

For those who have secured their interest rate before all this volatility, congratulations.  The technical picture for mortgage rates still is weak.  Therefore, we will maintain our locking bias.  The bond market will be closing at 12:00 pm MST today, and will be closed tomorrow for Christmas.  We wish you and your family Happy Holidays, and appreciate your support.

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