Mortgage interest rates got a nice little nudge to lower levels following yesterday's solid 10-year Treasury auction.  The Treasury Department will wrap-up this week's four-part auction schedule at 1:00 p.m. ET this afternoon with the sale of $11 billion of 30-year bonds. 

Trading action in the mortgage market is thin with sellers holding a slight edge over buyers.  There is some rather significant head-scratching going on as investors attempt to decipher the mixed message in this morning's weekly initial jobless claims report.  The Labor Department reported 52,000 fewer workers filed for first-time jobless benefits than the prior week - marking the best one-week performance in this economic statistic since January.   The 4-week moving average of initial weekly jobless claims, a measure closely watched because it tends to iron out week-over-week volatility, declined by 10,000 - the best weekly performance for the economic metric since February. The fly-in-the-ointment that prevented a sharper rise in mortgage interest rates was found in the component of the report that the number of people who continued to collect jobless aid after an initial week of benefits hit another new record into the week of June 27^th, signaling the employment picture remains bleak.  Until/unless a sustained improvement in the nation's labor picture develops mortgage interest rates will likely remain steady to perhaps fractionally lower than current levels.

The level of mortgage interest rates will also be influenced over the course of the next two days by trading action in the stock markets.  As I have mentioned all week in this space -- I see reasons to believe the Dow will find a bottom from which to launch a counter-trend rally before the market close on Friday afternoon.  In my judgment it is worth noting that yesterday the Dow set an intra-day low of 8087 -- before staging an almost 100 basis point rally to close at 8178.  If my assessment proves accurate - and admittedly the jury is still out on this one -- rising stock values will tend to produce modest to strong upward pressure on  mortgage interest rates as investors begin to more aggressively move capital (out of the relative safety of Treasury obligations and mortgage-backed securities) into riskier but higher yielding investments such as stocks. 

Today's conforming 30 year fixed rate is at 5.125%.