Upward Pressure Remains on Mortgage Interest Rates

Volatility in the mortgage bond market remains high this morning as investors continue to look for direction.  Although bonds opened up stronger this morning, they got within a short distance of what has been a formidable ceiling of resistance before falling sharply.  The downward move, once again, pushed bond prices beneath their 25, 50 and 100 day moving average.  In my opinion, we are more likely to see mortgage interest rates be pressured higher than we are to see any significant improvements in the near term.

Although today is a slow day for scheduled economic reports, it is a very important week for both the stock and bond markets.  The Consumer Price Index (CPI) report that is scheduled for release on Wednesday and will show consumer inflation for the month of November.  If this number continues to climb, we can expect the stock market to rally and the bond market to sell-off which will add upward pressure to mortgage interest rates.  We will also receive a rate update and policy announcement from the Fed on Wednesday.  Since the Fed has basically stated that they are on-hold, we don’t expect much to happen as a result.  The Fed will not be adjusting short term interest rates.

With bonds remaining under pressure, we will continue with our locking bias.