With more supply coming tomorrow and Thursday, coupled with a stock market that may have found it’s sea legs, borrowers looking to lock an Austin mortgage rate should stay defensive short term. More in a few.
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.
Good news is that the selling of late is moderating. Not so good news is that we do not see a catalyst to rally the market. For the time being, I’d say we are in a “Goldie Locks” market, not to hot, not to cold, but just right. Best to keep both hands on the wheel.
Last month’s auction however was a disaster with only 23.9%. Technically, we’re right up against the down trend line. This is where the battle of bulls and bears will take place and the weapon of choice seems to be the 30 year bond auction outcome (12:00 cst).
32 billion of the odd ball Treasury just hit the tape to yield 3.374% with 41.9% taken by Indirect Bidders. Stateside account took only 8.1% with the bid to cover 2.61 to 1. The issue created a .4 bps tail, just like the 5 year. The “Street” have given this one a grade of D. Post auction, selling tanked the market for another ½ point in the 30 year bond. With mortgage backs off a smooth 17/32’s, there is no place to hide. Buckle up and stay defensive until the shootin’ stops!
5 year notes hit the block at 2.605% with 39.7% going to Indirect Bidders. Bid to cover was 2.55 to 1 and the issue had a T-Rex type tail of 4 bps. To say the least, the bond market did not like it. Mortgage backs off a minimum of 20/32’s and the 10 year is off 40/32’s.
Best to take advantage of current mortgage pricing with such low odds of improvement in the cards. Currently, we’re trading 3.73% with the extremes at 4.62% and 2.0%. Lots of room to run (either way) as the economic picture changes.
Today's Austin mortgage rates: the market trades well but your risk reward is starting to dwindle. Given the stiff resistance overhead, best to use the improved mortgage levels. Take advantage.
Technically, the rally we’ve seen the past couple of days has improved the charts, turning the trend to neutral from bearish. The key here is neutral not bullish, telling us that continued upside (better mortgage pricing) will be a challenge.
If we can break through resistance at 117-31, I think we have a nice chance to climb higher (better rates) but if we see a close down around that 117-13 level, I think you will see us trading down to that 50% level at 116-295.
