Mortgage rates spiked quickly to open the holiday-shortened week with the average 30yr fixed rate coming very close to the 14-year high seen on June 14th. Not only were rates very high yesterday, but they got there in a hurry. It was yet another example of the kind of day-over-day change that has earned the last 6 months the dubious distinction of the most volatile since our daily record keeping began in 2009.
Volatility cuts both ways and, again, it resulted in rates moving LOWER today. That's the good news. The bad news is that rates remain very close to long-term highs. There are only 4 other days in 2022 that have seen higher rates going all the way back to 2008.
Today's improvement didn't happen for any big, important reason either. It was more of an in-range correction to the weakness that probably got a bit ahead of itself yesterday. From here, big, important reasons will be increasingly--well... important. The most immediate flashpoint for volatility will be tomorrow morning's policy announcement from the European Central Bank (ECB).
The ECB is Europe's version of the Fed and there can be a lot of spillover from EU bond markets to the US. There's no way to know which way the reaction will play out, only that elevate volatility remains a distinct possibility. Whether it's tomorrow or next week (or the week after), the market will need to get through the next major inflation report (next week) and the September Fed announcement (week after that) before we could possibly hope to confirm a shift back in a friendlier direction (notably, even "sideways" would be friendly after the past 5 weeks).