There is a hoary comedy routine where a sheriff, pursuing a suspect, stumbles across the suspect in disguise. The sheriff, oblivious to the fact he's speaking to the suspect, asks, “Which way did he go?” The suspect crosses his arms, points in opposite directions, and replies, “He went that away.”

So much of this market feels like the comedy routine; much of the information is contradictory, if not opposing.

We look no further than the Federal Reserve, which was again the lead story this past week. Credit markets were focused on the minutes from the most recent meeting of Fed governors. Most Fed watchers were seeking an answer to the question “When will the Fed taper?” If you were to ask two pundits to provide an answer, you'd likely get two opposing answers.

One pundit could persuasively reason that tapering – the Fed's reduced monthly purchases of Treasury and mortgage-backed securities – is imminent. He could base his conclusion on this passage from the Fed minutes: "Participants also considered scenarios under which it might, at some stage, be appropriate to begin to wind down the [bond-buying] program before an unambiguous further improvement in the outlook was apparent.”

Another pundit could reasonably arrive at an opposing conclusion. She could base her interpretation on incoming Fed Chair Janet Yellen's views on unemployment, which she says is “still too high, reflecting a labor market and economy performing far short of their potential. ”

Interestingly, mortgage rates were generally down over the past week.'s survey shows the national average rate on the 30-year fixed-rate loan dropped nine basis points to 4.39%. Freddie Mac's survey shows the rate dropped 11 basis points to 4.22%.

We say “ interestingly ” because the yield on the 10-year Treasury note moved meaningfully higher. The 30-year fixed-rate mortgage rate tends to correlate highly with the 10-year note – yet it didn't this past week.

To be sure, there was a lot of conflicting data and opinions this week, but we'll stick to our guns nonetheless. For the short term, we expect the rate on the 30-year mortgage loan to be contained between 4.25% to 4.50% (give or take a few basis points). We believe this range will hold for the next two weeks until Friday, Dec. 6, the release date for the next employment report.

If job growth surprises to the upside, as it did earlier this month, mortgage rates will surely spike higher, because most credit-market participants will anticipate an imminent tapering. Of course, if the report surprises the other way, rates will surely drop.

So waiting at this point remains a risky game. Keep in mind, in January the Qualified Residential Mortgage rules are scheduled to kick in. This means more time and documentation. In addition, Freddie Mac came out with its market forecasts for 2014. It expects the rate on the 30-year loan to hit 5% by the end of the year.

In short, the odds favor higher mortgage costs in 2014.

Courtesy of Jessica Regan.

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