For the second day in a row the economic calendar is empty today.  Therefore, we’ll be watching the equity markets & technical trading patterns.

At the open stocks are trading in positive territory thanks to announcements from two different Canadian banks that they be acquiring two US financial institutions.  This may be a sign of things to come because the US Dollar is currently trading at decade lows versus foreign currencies.  Takeover announcements typically help stocks to trade higher because businesses are usually acquired at a premium to their stock price AND as we know what is good for stocks is often bad for mortgage rates.

The technical trading picture for mortgage-backed bonds is fairly neutral.  The Fed will be buying up more treasuries today which is a good for mortgage rates.  I will shift to a neutral position for now.

Current outlook: neutral

It’s already been a bumpy ride in the mortgage-backed bond market this morning. Watch today’s you tube video to understand why.

Current outlook:locking bias

Mortgage rates are unchanged from Friday.

This week’s schedule for US Treasury fixed-income securities auction:
The US Treasury is scheduled to sell a high volume of T-bills, notes, and bonds this week. On Monday, $6 billion in Treasury-inflation-protected 19.5-year notes will be auctioned; along with $32 billion in 13-week bills and $31 billion in 26-week bills. On Tuesday, $27 billion in 52-week bills will be auctioned, along with a heart-stopping $42 billion in two-year notes. On Wednesday, the Treasury will auction $39 billion in five-year notes. And on Thursday, $28 billion in seven-year notes will be auctioned. In total $205 billion in securities will be sold.

Here is a link to read the blog post on the new mortgage rules which could delay real estate closings.

Current Outlook: bias towards locking on short-term transactions with additional supply of treasury bills.

The chart below shows mortgage rates ticking higher after hitting a low:

We pointed out earlier in the month the importance of the financial sector in this 2nd-quarter earnings season.  This morning Morgan Stanley & Wells Fargo reported earnings.  Morgan Stanley reported a 3rd straight quarterly loss and Wells Fargo provided weak guidance for the second half of the year.  These two reports are weighing on stocks which should help mortgage rates.

Given that mortgage-backed bonds rallied sharply yesterday we may see traders pull profits off the table which would cause rates to reverse back higher.  For now mortgage rates are extremely attractive but we could see them go a touch lower.  We are shifting to a neutral position.

Current Outlook: neutral

Watch today’s you tube video for details on what he said.

Click this link to view Fed Chairman Bernanke’s Op-ed piece in this morning’s WSJ.

Current Outlook: floating

Mortgage rates are essentially unchanged this morning despite an economic storyline that would typically help rates move lower.

Equity markets around the world traded lower today as investors pull back on stocks ahead of earnings season which kicks off on Wednesday.  The US Dollar is trading higher against foreign currencies and oil prices are lower.  This inflation-easing news has yet to help mortgage rates because of technical trading patterns.

We’ll keep a close eye on the market over the next couple days to see if bond prices can break through the 50-day moving average.  If they can, expect lower mortgage rates later in the week.  However, we’re taking a risk because it’s also very possible for bond prices to bounce lower here which would push rates higher.

Current Outlook: Cautiously floating