In a whirlwind of financial markets, yesterday brought about one of the most significant single-day spikes in mortgage rates in recent years. Although the surge was notable, it came with a slew of underlying factors that were dissected in our previous update. Instead of diving into the complex intricacies of market mechanics, you can find a detailed explanation at this link: https://www.mortgagenewsdaily.com/markets/mortgage-rates-08062024
Fast forward to today, and the scene is slightly less riveting. Bonds continued to shift, primarily in the longer spectrum of the yield curve. The 10 and 30-year Treasuries showed increased yields, while the 2 and 3-year Treasuries saw dips. Surprisingly, mortgages are currently aligning more closely with 5-year Treasuries rather than their standard 10-year Treasury benchmark. Consequently, when the 5-year performs better than the 10-year, mortgage-backed securities are showing a more positive trend than the 10-year would suggest.
Despite this, interest rates experienced a slight uptick, placing the average lender much closer to the 6.625% mark for a top-tier conventional 30-year fixed mortgage. Over the past two days, we witnessed a typical correction phase following a sharp decline in rates. Initial rebounds tend to be the most significant, with subsequent days losing momentum. Whether this correction has reached its peak remains uncertain. Global sources of market volatility that triggered Monday’s chaos could resurface, or a new catalyst might emerge.
Looking ahead, the focus shifts to next week’s inflation data, which holds the key to dictating the future trajectory of rates more than anything else in the immediate calendar. It is essential to keep an eye on these developments as they unfold, as they have the potential to chart a new course for the mortgage market.
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