Mortgage rates barely budged this week, straying from their typical pattern of moving with bond yields. A shortage of blockbuster trade-related headlines and economic data releases kept Treasury yields within a fairly narrow range over the last seven days, mostly moving on data emerging from Europe. Mortgage rates stayed even tighter, holding near their lowest levels in three years.
The typically steadfast relationship between the two has weakened in recent weeks, as low rates and increased refinancing activity have sapped investor demand for mortgages. As a result, rates haven't dropped as far as the recent fall in Treasury yields would normally indicate. Market volatility is contributing to this changing relationship:
When markets start to stabilize, the link between yields and mortgage rates will return. Looking ahead, markets will be attuned to Federal Reserve Chair Jerome Powell's statements from the Jackson Hole symposium on Friday, and Tuesday's release of consumer confidence data will offer hard evidence of how trade-related headlines are affecting consumers' economic outlook.
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