Present Market Conditions:
After the two-day surge, Mortgage Bonds are drifting lower ( meaning higher mortgage rates, 10 Yr Bond at 2.23%), adding to Friday’s afternoon’s pullback from the highs.The Mortgage rates rose this week to the highest level since the week of March 12 as a selloff in German bonds helped drive U.S. Treasury yields above 2.2 percent. The U.S. trade deficit reached $51.4 billion in March to the highest level since 2008. Also, the Institute for Supply Management's manufacturing index was unchanged in April, but manufacturing employment contracted as the index fell below 50 for the first time since May 2013."There were no economic reports scheduled for release today and the rest of the week’s calendar is on the light side. The Treasury will be selling a boatload of government Notes and Bonds.
The main reports for the week start on Tuesday with the JOLTS report. This brings us information pertaining to job openings and labor turnover rates. Retail Sales information then follows on Wednesday. On the schedule for Thursday is the Producer Price Index (PPI) which concentrates on the increase in prices of intermediate goods. Wrapping up the week is Industrial Production being released on Friday. There will also be Treasury auctions taking place n Tuesday,Wednesday and Thursday.
To begin the week, we are recommending carefully floating with Mortgage Bond prices on shaky ground.
Rates are still at low levels.