The only big economic news this week was that first-time unemployment benefits fell to a 42-year low further supporting a strengthening US economy.

Interest rates mildly moved down this week in response to a down stock market, but remain range-bound. Looking ahead, most experts feel that interest rates are predicted to creep upward, especially in the event the Federal Reserve increases its interest benchmark (the Feds Fund Rate) in September 2015.

Next week will be interesting with the two-day Federal Open Market Committee (FOMC) convening July 28th and 29th, and 2nd quarter Gross Domestic Product (GDP) growth numbers due out.

With the 10-year U.S. Treasury hovering around 2.26%, our posture remains biased toward locking in loans ahead of the FOMC meeting and GDP growth report. These two events could have major positive or negative implications for interest rates next week.

The U.S. stock market is rallying Friday morning on positive news surrounding the new Greek bailout negotiations. Both bond and stock markets have been roughed up the last few weeks over the ongoing drama surrounding this situation. Quietly, China has sold off violently the past week as well amid fears of a stock market bubble before rallying late in the week due to expanded Chinese Government monetary stimulus. This has further complicated global economic growth concerns, as well as potentially pushed out an increase in the Federal Funds rate to early 2016.

The financials markets of the last several weeks have reminded us that the world is still fragile economically and there are many uncertainties both domestically and abroad that can immediately affect market psychology.

Technically, mortgage bonds have remained below their 200-day moving average even with Greece’s default and a Chinese stock market question, which is a bearish single for bonds. Therefore, we continue to remain biased toward locking due to the poor technical present at the moment.

Mortgage yields and U.S. Treasuries dipped mildly lower on Thursday due to a mixed Jobs Report with 223,000 new jobs created. New job creations were slightly lower than expected, but the overall report was on the positive side. The one positive for bonds was the lack of wage growth.

Greece continues to weigh on the global markets as the Greeks did default this past Tuesday on their government debt. However, fear of other debt defaults spreading to other countries within the European Union does not appear to be present at this time.

Technically, bonds continue to hover near support at 2015 price lows, but, remain on longer-term downtrend. Therefore, we continue to remain biased toward locking in rates.

In closing, we wish everyone a Happy July 4th weekend.

U.S. Treasuries and Mortgage rates continued their descent lower this week (as price goes down, yields go up) with the 10-year Treasury closing at 2.500% on Wednesday. However, interest rates took a welcomed reprieve on Thursday prior to a mild decline Friday morning.

Friday morning saw the May Producer Price index (PPI) rise .5% versus .4% expected. However, the inflation measure that excludes volatile food and energy prices dropped. This helped keep rates in check.

The Fed meets next week for its 2-day meeting that will begin Tuesday and end on Wednesday. The expectation is that the Fed members will begin to prepare the investing world for rate increases down the road, presumably in late 2015.

With a ton of technical damage in the mortgage bond market, we remain biased toward locking even though the dramatic volatility the past several weeks appears to suggest bonds are oversold.

U.S. bonds rose this week with a volatile spike Friday in response to a solid Jobs Report. The headline number in Friday’s Jobs Report was 280,000 jobs created last month, which beat expectations. This was better than expected.The jobs number increased the prospects of a Fed “lift off” from near zero interest rates. Both bonds and stocks continue to trade with a keen eye on when the Fed will increase rates. While the jury is still out on whether October will be the month, the odds increased Friday morning in favor of an increase.

Technically, long term mortgage bonds broke through key technical multi-year resistance bands. This has priced up mortgages across the board.

With the current 10 year U.S. Treasury at 2.38%, we are biased toward locking in loans at the time of application.

U.S. Bond yields drifted fractionally lower this week based on continued concerns about the overall lack of growth in the global economy. Supporting this claim was the revised gross domestic product(GDP) reading Friday morning. The revised GDP came in at -.7% lower than the -.2% originally reported. This revision was widely expected so the bond market was not caught off guard by this revision. Both Canada and Europe also reported anemic GDP numbers this month.

Greece was front page news this week as it is struggling to make its June debt payments. Should a resolution come to pass, bonds may see a sell-off. However, should Greece default, things may become chaotic, which will benefit U.S. bond yields.

U.S. housing data continues to remain positive with favorable numbers this week out of the Case-Shiller Home Price Index. Solid housing data has driven home prices to new highs for 2015.

With so many unknowns in the world, we continue to float interest rates with a bias toward locking.

Friday morning saw the U.S. Bond market sell off in response to a mildly stronger than expected Core Consumer Price Index (CPI) report which strips out volatile food and energy costs. Core prices rose on higher prices for housing expenses and medical costs (remember inflations is bad for bonds), while house furnishing saw the biggest increase since 2008.

Stocks continued their rise this week to record levels. Earlier in the week the Federal Reserve released its minutes which all but took a June rate hike off the table.

With the 10 year U.S. Treasury trading at 2.21%, we continue to cautiously float interest rates with a bias toward locking.

Friday morning saw U.S. Bonds rally on both a lower than expected May Consumer Sentiment Report (88.6 vs. 96.0), and May Empire Manufacturing Index (3.1 vs. 4.5 expected). The rally in bonds this morning is a welcomed relief and comes after another tough week for bonds which saw the 10-year Treasury reach 2.29% mid-week escalating sentiment that the super low rate environment could be in jeopardy.

Globally, the European Central Bank reassured markets that the ECB’s asset purchase program will continue until inflation reaches 2%. These “dovish” comments aided in Friday’s morning bond rally in the U.S.(remember the world is so interconnected today).

On the housing front, online real estate firm Redfin reported Thursday that home sales across the market rose at a rate of 5.40% from April 2014 to April 2015. This is a positive sign for real estate brokers and mortgage originators.

Due to continued volatility, we recommend cautiously floating interest rates with a biased toward locking.