May 21st, 2013 12:17 PM by BILL WILBANKS
It hasn't been a good week so far if you're watching mortgage rates even though there is little happening announcement wise today. They've continued to climb and if you have been interested enough to watch the bond yields over an extended time you would have seen a consistent upward trend since they bottomed out last August (2012). In fact I would refer you to a very telling article and series of charts that can be found on this website by clicking on the "Mortgage Rate News" button found on the home page in the left column. Then click on today's article written by Matthew Graham, The Day Ahead: Recent Volatility Might be Logical.
Yields have been on a pretty steady upward trend on the 10 year Treasury since late last summer. Why should you care? As benchmark Treasury yields fall, prices of mortgage-backed securities move higher, which allows lenders to offer lower mortgage rates. The inverse is true as Treasury yields rise. In that case mortgage-backed security prices are led lower, which forces lenders to push mortgage rates higher. That's pretty much been the tale of the tape of late.
At the moment, it seems the market is pretty much sitting on their hands until the 2 PM Fed Reserve statement tomorrow afternoon. The market is looking for a more defined Fed direction to hang a hat on. Are they going to continue as they have or will they begin to reduce their buying support on a wind down? Wait and see.