January 5th, 2011 2:58 PM by BILL WILBANKS
Well we started out fairly flat this AM and after ADP reported payrolls up as much as 300,000 during December the 10 year jumped from yesterday's close at 3.3287% to 3.4634%, almost a 14 bp bump and points on most fixed are up .375% to .50% point kicking the fixed up by at least 0.125% on conventional loans today. The ADP is well known for being all over the map followed by sizable adjustments after the fact. This Friday's government report will give a better look, but the bond market investor chasing yield has reacted and rates could do little but move up. If you were ready, I hope you locked this morning's lower rate. Friday's report could knock it back.
Remember, good news is typically bad news for interest rates folks. As benchmark Treasury yields fall, prices on mortgage backed securities move higher, which allows lenders to offer lower rates. But, as Treasury yields rise as they did today, mortgage backed security prices are led lower, which forces lenders to push mortgage rates higher through higher price (points).