Both stocks and bonds are performing well this morning, as markets optimistically await the first of two important reading on the labor market; tomorrow’s ADP report and the more important reading from the Bureau of Labor Statistics (BLS) that will come on Friday. With mortgage bond prices continuing to be on a hot streak, the pending reports could influence the ongoing direction in the near term. If the reports show the labor market growing faster than most anticipated, rates could be pressured higher. However, is the labor market is shown to not be as strong as anticipated, we could see rates continue to drift lower. With mortgage interest rates currently at all time lows, the risk of a short term pull back in rates is growing.
Yields on the 10-Year Treasury Note have fallen, briefly breaking beneath the .5% level once again. Each time yields have fallen to this level, the next move was a sharp increase. However, with the Federal Reserve continuing their bond purchase program, is seems that any concern of a sharp move higher are muted. However, we could see a small move higher in yield as the markets digest economic reports.
At the moment, there is no need to rush in to lock. However, if you choose to float, do so careful and while closely watching the markets. With this being “Jobs Week”, we could see an increase in market volatility.