Mortgage Rates in Evergreen Colorado - Market Update April 5, 2010
Mortgage Rates got hammered last week, moving sharply higher on positive economic data and the best jobs report in quite a long time. Also weighing heavily on rates was the fact that the Fed exited their mortgage-backed 
security purchase program on Wednesday, meaning there will now be less demand for mortgage-backed treasuries, and also more volatility in the market without the Fed safety net in place.
The downward trend in bond prices (upward trend in Mortgage Rates) continued this morning on strong housing data, and it is difficult to tell right now where or when this trend will stop.
Take a look at the bond chart to the left. The green lines are "support" lines and the red lines are "resistance." This means that it will be difficult for bond prices to "pierce" through one way or the other. However, we saw bonds pierce through support repeatedly last week, and now prices sit well below the 200-day moving average (pink line), an important trend line.
With prices so over-sold, a correction could be in store, but who knows how much of a correction. There is a large amount of supply hitting the trading floors this week, and without the Fed to keep the new supply in check, we could see further price-erosion. Fed policy statement is due out this week, and the verbiage in the statement will be interesting and closely watched, a potential market-mover. This week will likely see a lot of volatility in Mortgage Rates as the markets try to get used to things without the Fed present as a buyer.
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