Weekly Mortgage Overview: 1/21/2014

By January 21, 2014Mortgage Overview

This is a very light week for economic data. The bond market was closed Monday and there is really only one day (Thursday) with any meaningful economic releases. Plus, there are no major U.S. Treasury auctions to guide us this week.

This week is all about Davos. This is where the World Economic Forum is being held this week. There will be many speeches by major economists and central bank presidents. In the past, this has not proven to be a major market mover but it is the only thing going on this week. Bond prices will be particularly sensitive to discussions about the stability of the European recovery.

10 Year: We need to watch the 10-year Treasury note yield closely this week as it continues to trade below the 2.900% mark. If it closes (not trades but actually closes) then that will be a signal that mortgage backed securities (MBS) pricing may take a turn for the worse. It fell all the way down to 2.8319% this morning and has now had a very nice rebound and has hit 2.8558% so far. Can it break back above 2.900%? If so, then it will provide some head winds for MBS pricing.