Market Update (12/10/2009)

This week has been a little bit of a roller coaster with interest rates rising on Monday, falling on Tuesday, and going back up again today. Today’s move is particularly concerning because some economic news that would typically trigger a good day for the bond market was released this morning. I am referring to the weekly initial jobless claims coming in higher than expected. This negative economic information would usually mean good news for mortgage bonds and mortgage interest rates.

The issue with the bond market this week is that results of the Treasury Department auctions that we discussed on Monday have been less-than stellar. The weak appetite for treasury bonds spills over into mortgage bonds and mortgage interest rates are up as a result. Will this trend continue? The long-term answer is “YES.” The short-term answer is “I don’t know.”