Monday Real Estate and Mortgage Update

The bond and mortgage markets opened about unchanged early this morning still focusing on last Friday’s Feb employment report that saw better job growth than what traders and economists had thought. 

Given the light calendar this week the markets will look elsewhere to focus. This morning it is China and the concern China’s economy isn’t as strong as thought and what Chinese officials have been reporting through the data flow. If the US had domestic issues headlining the week, the possible slowdown in China would not likely get as much attention as it is today----and even that is not much. Recent reports show China’s exports have declined and setting off worries that the country’s economy will continue to contract, although the overwhelming consensus is for a growth rate of 7.3%. China reported the biggest trade deficit in two years, driving demand for the safety of U.S. debt.

No new news from the Ukraine over the weekend; the divide still remains between those that want a new government in the Ukraine.  The present government is defined as corrupt. The present government (at least those that are not hiding) is made up of primarily Russian leaning oligarchs that according to the opposition have looted the treasury and lined their pockets with ill-gotten political schemes. In Crimea there is a vote scheduled for next Sunday on a referendum to secede from the Ukraine and join Russia. No real new developments over the weekend.

The technicals are slightly bearish now for longer dated interest rates (treasuries and MBSs); the 10 yield is now above its key averages, the 20, 40 and 100 day. Trading at 2.79% this morning the 10 is resisting moving above 2.80%, the level that was last seen on 1/23.2.80% is significant from a technical perspective, prior to breaking below it on 1/23 the level had served as a critical pivot level going back to last August. If 2.80% is exceeded it will lead to speculation that 3.00% is in sight. Fundamentally, investors and traders are still uncertain about the real strength of the economy; the Fed also not sure. 

There is more likelihood that rate will increase than decrease, but without much going on this week I would suggest floating your interest rate unless you are closing in the near future.