Mortgage Rates 8/11/2015

Big News today, China has devalued their currency 2%.  2% doesn’t seem like much, but a 2% drop in the DOW in would be almost 600 points so this is a huge move for just one day.  China has been trying to move to a service economy and it is not faring well in the short term.  This devaluation makes their goods cheaper and ours more expensive and has caused a selloff in our stock market and a rally in bonds, thus benefiting rates this morning.

The technical picture is interesting as Mortgage Backed Securities, MBS, are trading in a wide range and right above the 100 DMA and close to the 200 DMA, those are both very tough resistance levels.  We are cautiously floating this morning, but the last time we hit these levels MBS sold off quickly.