Market Commentary

Updated on April 20, 2018 10:33:56 AM EDT

There is nothing if importance set for release today. That may be bad news for bonds and mortgage rates because some friendly economic data would be quite helpful. The benchmark 10-year Treasury Note yield is now above what looks to be a critical resistance level. What is concerning is that if we stay above 2.91%, there isn't much to prevent a move to 3.00% or even higher. I suspect 3.00% won't be easy to crack, but since mortgage rates tend to track bond yields, just testing that threshold means rates would be higher than where they are this morning.

What is worth noting and could work in our favor is the fact that the last time yields were in this area, concerns about their impact on corporate borrowing and economic growth caused a huge sell-off in stocks. That in turn led to funds moving into bonds, driving yields and mortgage rates lower. One could argue that we are ripe for a sequel to that story, although stocks are not as high now as they were when that last happened. However, until we actually see the sell-off in stocks start or yields retreat below 2.91% on their own, there is a fairly high risk of rates moving higher in the immediate future.

Next week has a handful of relevant economic reports that are expected to influence mortgage rates, some of which are considered to be highly important. The most important data comes later in the week, but there is something taking place each day- starting with Existing Home Sales Monday morning. There are also a couple of Treasury auctions mid-week to watch. Look for details on all of next week's activities in Sunday evening's weekly preview.

 ©Mortgage Commentary 2018