Big picture still suggests low Austin mortgage rates will be with us for some time to come. Just get used to the volatility.
Notes, bonds, and mortgage backs have slipped as we go into the last hour and a half of trading. Stocks have been pinched as well, down 75 points on the big board.
The market will need to close above this level (below in yield) or at least stay near that level to confirm a near bull trend is in the making
Technically, the rally today has formed a high volume area at 117 21 (yield of 3.68%). The market will need to close above this level (below in yield) or at least stay near that level to confirm a near bull trend is in the making. Given that so may outside influences have played a factor today, we view the move as somewhat suspicious. Not saying that we’re going to reverse in any huge way. Just cautious about any further advances (rally). Keep that in mind as the day progresses.
Technically, the stealth rally has taken us to major resistance, right at the low yield mark of 3.67%. A break and close below 3.67% is needed to confirm the upside move and project that further gains (lower yields better mortgage pricing) is in the cards. With most oscillators now neutral to bullish, the only fly in the ointment is growing overbought conditions on the chart. Seems like a good day to take advantage of the best Austin mortgage pricing in quite some time.
If our work (and that of others ) is correct, we would expect a larger bearish move (more selling/worsening mortgage pricing) in the days ahead. To avoid another leg down, we need to close below 3.74% on the 10 year note (end of day close). Best to keep both hands on the wheel.
Way behind the curve today as we’ll already entered the second half of the day’s trade. For the most part, the market has been like watching paint dry. Total movement in mortgage backed securities has only be 3/32’s (currently up 1/32nd) while stocks opened strong and have held most of their gains (Dow plus 130).
43 billion of 2 year notes hit the block at 1.034% with 45.2% taken by indirect bidders and those foreign central governments we talked about earlier. The auction was right on the screws (no tail), producing a bid to cover of 3.23 to 1. Very strong but then again, it’s short term paper with a maturity of 2 years. Nonetheless, there is still an appetite for Uncle’s paper which is a good thing for us. Mortgage backs have held their ground, up 3/32’s on the day.