This Week will open with a little more pressure on the rate markets. The end of the drive to continual lower rates appears finished. We have warned that was happening two weeks ago, although we still do not expect mortgage interest rates to increase a lot. Mortgage rates did not fall nearly as much as treasury rates as investors stampeded to safety on worries the economy would fall back into recession, so it is unlikely mortgage rates will ratchet up in lock step with treasury rates. The 10 yr note yield has increased 40 basis points in rate over the last three weeks while mortgage rates although higher now, have not increased much.
This week has a full plate of economic data; the first round of a lot of key August data. Retail sales, four reports on the manufacturing and business sector, both PPI and CPI for August and Congress back in play. We expect market volatility will continue driven by uncertainty that still hangs over the economic outlook and elections coming up. The 10 yr note is approaching oversold short term readings, given any weaker data we would expect the note and mortgage prices will increase but the wider perspective now is negative for rates. Use any improvement in mortgage prices to lock in clients that have been floating looking for better rates. Keep a closer look on the rate markets this week.
