Treasury yields and mortgage rates started climbing Friday afternoon and have continued through the first part of the week.  The 10 year treasury passed through the 1.6% level and bounced against 1.63% today before a slight retreat. Thirty year mortgage rates are barely hanging onto 3.5%, up from 3.375% a week ago.  Not big movements but possibly a sign that we’ll be moving away from the bottom. 

There isn’t any one single thing that is moving rates.  The markets have decided to see the economic reports as a glass half full instead of half empty.  We are seeing a few positive reports but nothing strong nor consistent.  The trend will be determined by today’s large bond auction. The size of the auction is causing speculation of the need for an increased yield to get everything sold.  We’ll see.

In general economic news:
Following the sharp decrease in June retail sales, not surprisingly,  June’s credit card usage was down sharply also.
The MBA report of home purchase mortgage applications was down 1.8% from last week. Over the past month, these reports are showing no strength in the housing market.
Non-farm productivity is up for the second quarter but output is down.  We’re producing more, more efficiently but selling less.

Tomorrow’s jobless claims report and International trade report, coupled with the auction results will set the short term trend for interest rates.

Enjoy the last four days of the Olympics.