It was a great run for mortgage rates over the last 2 weeks with a sharp decline last week followed by very respectable ground-holding in the present week.
But things got less respectable today. Bonds (which underlie day to day rate momentum) began the day in only moderately weaker territory before tanking hard in the afternoon. Said tankage was the result of an appallingly weak 30yr Treasury auction.
We discussed Treasury auction implications a bit yesterday, but the gist is that a bad Treasury auction is bad for rates. It's that simple and today's Treasury auction was very bad. There's nothing too dramatic underlying the bad showing. If anything, it's just confirmation that rates have managed to come a long way (lower) very quickly and that it's time for them to cool off and consolidate before the next move.
Anything can happen on any given day, but the "next move" stands the best chance of getting some guidance after next week's Consumer Price Index (CPI) on Tuesday morning. This is a key inflation report that has been responsible for some of the biggest moves we've seen in rates in the past 2 years.
As for today, the average mortgage lender was only moderately higher in the morning, but most lenders made mid-day adjustments that left them sharply higher compared to yesterday afternoon.