So Much For Uneventful

Rates are up sharply this morning as two key economic reports were not favorable to mortgage bond traders.  Jobless Claims and Durable Goods Orders (excluding transportation) both came in better than analysts had anticipated.  News that is good for the economy in general is usually bad for mortgage rates.  This occurs for several reasons, but the most basic of which being that mortgage backed bonds are a fixed income investment similar to treasuries and are usually sought as a "safe haven" from potentially weak returns in other sectors of the market.  So when data indicates the market may be improving, investors move money out of bonds which causes prices to drop and rates to go up.

The disaster is not quite so terrible as Stocks haven't really exploded out of the gate.  In fact, the Down just dipped under positive on the day.  There is plenty of data to keep stocks in check such as weak corporate earnings (in general), and the lowest new home sales reading in 17 years.

Yesterday's recommendation was to lock.  If you did not, the signals are pointing more towards floating this morning, but as always, stay glued to the news.  The news won't always help you know which direction rates are going, but today, we have no significant factors that will cause the mortgage market to deviate from other fixed income.  So if you see the yield rising on the 10 year treasury and stocks are rallying, it's probably best to lock.  Still, I think we'll avoid that now that we have the home sales data out.