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It was another volatile day in the markets. Stocks traded in a wide range before eventually closing in positive territory. Interest rates seem to now be ignoring the movements of stocks as benchmark Treasuries rallied this morning after Jobless Claims data and never looked back. While mortgages were slow to keep pace with the Treasury rally, they eventually caught up and most lenders repriced for the better. ...

Benchmark Treasury yields rose and mortgage-backed security prices fell after the market received mostly positive economic data on the manufacturing sector. Consequently lenders pushed mortgage rates a few basis points higher this morning. However, as the day progressed both Treasuries and MBS recovered from their weakest levels. This allowed lenders to erase early morning rate sheet pricing reductions. Reports from fellow mortgage professionals indicate lender rate sheets to be about the same as yesterday. ...

Just like yesterday, mortgage rates moved higher at the open today...and then even higher later in the day as MBS prices fell further and lenders had to reprice for the worse. MBS pricing took a beating today and so did lender rate sheets! While not completely confirmed, this looks to be the beginnings of all interest rates moving higher....

I advised yesterday that if you are a risk taker that floating could pay off, well it did. At the open we saw better rate sheets and as the day has progressed MBS prices have continued to move higher which has led to a few reprices for the better. This is partially a function of weakness in the stock market which has resulted in scared money moving into safer assets in the Treasury market. My advice is to continue to float in the short term. I cannot stress that time frame enough: SHORT TERM. AQ and MG have been talking about "year end" a lot. They note "year end" as a very slow time on Wall Street. This implies the marketplace may move in a volatile manner as many traders take holiday vacations while others simply stop trading so the accounting department can clean up the books for shareholder review. Basically, unless some form of major headline news is presented, most of the price movement and rates direction we see over the next two weeks will not be indicative of things to come in 2010. With that in mind, I will be offering only SHORT TERM lock/float advice. Today, if you lender has repriced for the better and you are happy with your rate...go ahead and lock it up. Again...slow markets = volatile price action and the potential for large shifts in interest rates. ...

The theme in the secondary mortgage market this week has been volatility. Prices of mortgage backed securities have moved around a wide range as traders attempt to balance their uncertain long term economic outlooks with optimistic short term sentiment in stocks. This ongoing struggle has mostly insulated mortgage rates from movements in related markets, but not totally. Today, mortgage backed securities opened lower in price and most lenders moved mortgage rates higher. ...