Market Commentary – 6/12/15

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.