This week was a good week for interest rates. Rates today are just over 1/8 of a percent better than they were on Monday. The main reason we saw rates improve this week was because of the Federal Reserve’s (FED) decision last week to do another round of quantitative easing.
Generally the 10 year US Treasury bond moves in unison with mortgage bonds, but after the FED’s announcement to focus on buying mortgage bonds in this round of easing we have seen the gap between the two narrow. This is good for mortgage rates because mortgage bonds have a direct impact on mortgage rates but Treasury bonds don’t.
European economies are continuing to slip deeper into recessions. Europe is still wrestling with their debt problems but seems to be on track to resolving them. This would generally be consider bad news for US mortgage rates, but the positive effect of the FED’s decision to buy more mortgage bonds outweighed the negative.
No major economic reports are schedule to be released for the rest of the day so I don’t expect any major movement in the market today.
Tags: 10 year US Treasury bond yield, Europe debt crisis, market preview, mortgage rates outlook, Quantitative easing