Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds:  +12bp

Mortgage backed securities mounted a pretty good rally as the 5-year Treasury Note Auction went well and the Beige Book was released.  All that comes in continues to favor the “flight to safety” and that bodes well for continued low mortgage rates.  However, MBS prices ended they day beaten back to just below resistance.

Starting today off, MBS prices were down and looked like they were to remain trapped in a sideways pattern, but things change in this market, and sometimes very quickly.  Currently MBS prices are pushing higher and are back above resistance.  If they can hold above resistance, we will be setting new recent record low mortgage rates.  Jobless Claims came in at 457K, pretty much in line with expectations of 460K, with its 4-week moving average dipping a bit to 452.5K.   Still to come this afternoon is the last of the Treasury Auctions, the 7-year T-Note, due out at 1:00.  If this auction follows the others with decent results, MBS Prices could hold their ground, even make up some more.  The caution right now is that the resistance levels they are currently breaking above have managed to hold them back six times already.

What does this mean for Florida Mortgage Rates?  Mortgage rates continue to hold steady, if not edge lower, and the outlook continues to be favorable for low mortgage rates.  If things change, we will post accordingly, but enjoy the ride for now.

Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds:  +16bp

Yesterday was another interesting day if you follow some of these rate alert services (those of you whom are mortgage professionals).  If you followed some the alerts from one company, they issued a lock, followed by a trend reversal and a float alert.  And these guys are supposed to be experts?  One good thing is that I am getting ticked off at their incompetence and starting to post these update in more websites, beginning next week with a consumer only focus at Mortgage Myth Busters.  Yes, I am a member of that group, which was launched to protect the consumer from all of the BS out there, hence the reason for my posting there as well.

Yesterday saw another see-saw day with no real direction, a movement which will likely continue.  The benefit to this “ride” is that MBS prices are towards the bottom side of their sideways trading pattern and riding their 10-day moving average higher in an ascending triangle formation.  The key thing is that the trading range that MBS prices are trapped in is shrinking quickly and a breakout will need to occur, maybe today, but certainly before the end of the week.  There are some concerns, but yesterday’s 2-year Treasury Note auction went well overall and signals continued strength in “safety” investments.  There remains a great deal of uncertainty as can be seen in the charts, such as the fact we had 3 dojis out of the last 4 trading days. 

We are currently higher today and inching up slightly as this report is written, now up 16bp.  Most of that is due to stocks weakening, maybe simply profit-taking, or maybe due to data this morning.  MBA Purchase Applications showed a slight rebound (2.0%) in Purchase Applications, which was mentioned in the weekly radio show.  Also mentioned in the show and seen in the report, Refinance Applications fell 5.9% as mortgage rates did edge ever so slightly higher.  The big report for today was the Durable Goods Orders which came in at –1.0%, well below the 1.0% expected.  Removing transportation and we still saw a drop of –0.6%.    Overall the report was mixed, though net negative.  Crude Inventories will be released shortly and may have an impact.  This afternoon will see the 5-year Treasury Note auction which will be watched closely, followed by the Beige Book which will likely have more of an impact than normal due to Bernanke’s recent comments.  It could get interesting later on, good or bad.

What does this mean for Florida Mortgage Rates?  Mortgage rates continue to drift lower, possibly on their way to test the recent record low mortgage rates.  Can they go lower?  Maybe, though their remain some concerns.  Overall, at this point we continue to see a favorable outlook for low mortgage rates.

Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds:  0bp

We had a little bit of a “scare” this morning as mortgage backed securities dropped out of the starting gates this morning, but have since recovered resulting us not needing to change our stance, at least not yet.  MBS prices do tend to trade opposite of stocks and with stocks projected to open higher, MBS prices were on the descent, but that has changed and MBS prices have regained all of their lost ground at this point.

Not a significant factor, but weekly store sales reports showed declines.  Looking at the housing market, the Case-Shiller Housing Price Index (HPI) was released and showed strength.  The 10-city Composite was up a seasonally adjusted 0.5% (up 1.2% unadjusted).  That brings the unadjusted year/year rate to 5.4%.  This news was helping to keep stocks on the positive.  However, just as we expected, Consumer Confidence was released and was below expectations.  Consumer Confidence was reported at 50.4%, below the expected 51.0%, but last report was revised higher to 54.3 from 52.9.  The report was mixed overall with the concerns still centered on jobs and income expectations, but the planned purchases of appliances, cars, and other “big ticket items” rose, albeit very slightly.  This afternoon will see the 2-year T-Note auction which any surprise could hurt MBS prices and continued strength could give them a boost. 

What does this mean for Florida Mortgage Rates?  Mortgage rates continue to hold steady and will likely continue to do so, at least until this afternoon.  Overall, the outlook continues to look good, though concerns remain, requiring a very cautious eye and an “itchy trigger finger” on the lock button.

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds:  -3bp

Mortgage backed securities are trading in a fairly tight range today and are essentially unchanged.  There is little data today, leaving stocks and technical indications in the driver’s seat. 

New Home Sales was released this morning and was reported at 330K, above the 310K expected and up from 300K last report.  That is a rebound of 23.6% after falling 36.7% in May, leaving it down considerably still so don’t get overly optimistic.  The Chicago Fed National Activity Index was also reported this morning, coming in at –0.63 led by a deterioration in production and employment related indicators.  The index indicates subdued inflationary pressure from economic activity over the next year.  Next up were the 3-month and 6-month T-Bill Treasury Auctions, both coming in strong even with the rebound in equities. 

According to the charts, with MBS prices remaining above their 10-day moving average there is no need to rush into a locking stance.  We can see an ascending triangle pattern along with the current sideways trend which signals a coming need for a break out to either side.  With stochastic indications dropping to the bottom of the overbought spectrum, there is no need for a locking stance unless MBS prices drop and hold below their 10-day moving average, but keep in mind that the 25-day moving average is rising quickly as well, which could play a role in where mortgage rates move from here.

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely continue to hold steady or improve slightly as the week gets rolling.  The overall outlook continues to look good and may even provide for new record setting low mortgage rates.  There are some concerns, but the risk/reward ratio is still favoring floating at this point.

Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds: 0bp

It is a beautiful day down here in South Florida as Tropical Storm Bonnie works here way by Miami.  Off and on rain showers and occasional breeze will be the norm for today.  Why do I bring this up?  Because the markets right now are a lot like a tropical storm, if not a hurricane as the “winds” blow back and forth and things go back in forth between “rainy” (bearish) and sunny (bullish).  All in all, as the storm spins around it can make anyone dizzy, especially if they do not know how to get through it.  As always, lock if you cannot stomach risk and then you won’t get “sick”.

OK, data is non-existent today and that leaves technical factors and stock driving the markets.  Of course, news is a key player as well and even Tropical Storm Bonnie is making some waves.  Mortgage backed securities are hitting up against resistance, actually closing just above it two days ago and began to fall back yesterday.  Will they go lower?  They started to today.  In fact, they were down 37 basis points no too long ago, which was at their 10-day moving average and they bounced back to flat now.  That shows that they will likely hold steady if not try to bring even lower mortgage rates, though this “storm” could bring change and quickly.  As we have mentioned in recent reports, so long as MBS prices hold above their 10-day moving average, we see no need to change stances.

What does this mean for Florida Mortgage Rates?  Florida mortgage rates will likely hold steady and may yet move lower, so don’t rule out new record low mortgage rates.  However, things can change and do so quickly, so we must remain cautious.

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds:  -9bp

Once again, those mortgage rate alert services that sent out lock alerts on Monday were wrong as MBS prices, and thus mortgage rates, went even lower and set new highs yesterday.  It is funny that these same people attack services like this one which are free yet this one likely has a higher accuracy rate and understands the market even better than their own.  Makes you wonder sometimes, but if you are a mortgage professional, it pays to follow more than one service and get a different perspective, rather than limiting yourself to a one-sided story.  That is especially true if you do not understand the charts and how to predict where mortgage rates are going beyond this very second or you will get caught with your pants down acting on false alerts like Monday’s.  Just our opinion.

OK, keeping in tune with our “reality check” theme for the day, let’s look at today’s data and upcoming events.  MBS prices are down because stocks are in rally mode.  Why?  Certainly it is not due to the Jobless Claims numbers which came in at 464K, above expectations of 450K and that turns the 4-week moving average back upward, now at 456K.  The key note in this report is that the Labor Department finally confessed that the prior numbers were held down because of the July 4th weekend.  Additionally, you likely heard Ben Bernanke is finally not trying to distort reality, rather saying that he has no clue what the economy is doing or will do.  OK, he didn’t put it exactly like that, but that is a pretty good summation of it.  Interestingly enough, we are seeing some Democrats beginning to revolt from the Obama Administration’s tax everything strategy as they are saying that the tax cuts the Bush Administration put in place should not be allowed to expire at the end of this year.  The good news, Existing Home Sales was not as bad as expected, but it is still down, so keep that in mind.  OH, and Leading Indicators came in inline with expectations at –0.2%.  The Treasury Department just announced the amounts of next week’s auctions of the 2-year, 5-year and 7-year T-notes.  Also, Bernanke is saying that the Fed needs to decide the fate of Fannie and Freddie Mac soon. 

What does this mean for Florida Mortgage Rates?  Low mortgage rates appear to be holding, though an edge slightly higher short-term can be expected.  Overall, the outlook looks good for steady to improving mortgage rates at this time, though this market could bring change quickly.

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds:  +16bp

Mortgage backed securities gave up all of their gains and ended flat (0bp change) when stocks managed to rebound from their losses, even posting a slight gain.  Today, MBS prices are rolling along the same as yesterday, again following stocks’ lead.  Just as mentioned in yesterday’s radio show, there does not appear to be any genuine reason to change stances and yesterday’s knee-jerk rate lock alert from alert services may have been an incorrect alert, again.  Time will tell for sure, but so long as MBS prices hold above their 10-day moving average we should see low mortgage rates.

Data remains scarce today with only the weekly MBA Purchase Applications and Crude Inventories reports.  MBA Purchase Applications showed a 3.4% gain in purchase applications essentially covering just last week’s 3.1% loss and certainly no reason to get joyous yet.  Refinance applications registered a 8.6% gain as mortgage rates remain low and homeowners try and qualify and close at these low mortgage rates.  Crude Inventories will be released in just a few minutes.  Federal Reserve Chairman Ben Bernanke will be testifying before the Senate Committee on Banking, Housing, and Urban Affairs, U.S. Senate for the Semiannual Monetary Policy Report to the Congress this afternoon (2:00), which could affect the markets.

Looking at the charts, they remain much like described in yesterday’s radio show, with MBS prices having pulled back Monday in what appears to be a corrective move, though there are some concerns.  Stochastic indications have moved out of the overbought spectrum and allow for rebounds in MBS prices, though they are currently not showing that to begin yet.  The 10-day moving average has flattened out somewhat, but every other moving average continues there climb.  Once again, the charts are not currently pointing to a trend reversal which means we should see mortgage rates edge lower again soon.

What does this mean for Florida Mortgage Rates?  Mortgage rates are again trying to edge lower today and the outlook currently favors steady to improving mortgage rates at this point.  There are some concerns, but unless mortgage rates edge higher still, we see no need to change stance.

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds:  +22bp

My apologies for not getting off a mortgage rate forecast yesterday, but it was one of those times I had to fly all day and without adequate breaks between flights to shoot off a post.  Overall, I would not likely have changed my stance as yesterday’s move was more of a correction as I had mentioned would be needed.  I am also going to omit this week’s weekly update at Lenderama, though I may do one for ActiveRain still.  I will be doing my weekly radio show, only it will be today at 1:00p versus the normal Monday at 11:00.  I am still working on getting someone else whom understands the market to fill in for me on posts here and also for ways to ensure there is a broadcast, even if not live, every Monday so you have the best information available to you to make decisions.

OK, I am not going to dwell too much on yesterday, but if you were watching the rate alert services, they panicked and had you locking, which is OK if you were about to close anyway, and something you need to be doing if you cannot stomach risk.  Yesterday, mortgage backed securities plummeted 35 basis points and today’s move is not covering that fully, which does leave some concerns.  The stock market is currently rebounding from its initial fall today and that is limiting MBS’s ability to rise.  Data that was released yesterday and today continue to point to what I have been stating for a while, the fact that the housing market is far from recovering and the data points to its continued weakness after the termination of tax credits.  The short-term Treasury Auctions continue to go well, so demand for “safety” investments, at least on the short-term scale, remains robust.  This week does not hold a lot of data and therefore technicals and stocks are in the driver’s seat, which points to most likely steady or even improving mortgage rates from here at this point.

What does this mean fro Florida Mortgage Rates?  Florida mortgage rates are rebounding from yesterday’s edge higher.  The short-term and current long-term outlook remains favorable at the moment for mortgage rates edging back lower or holding fairly steady.  There are some concerns, but the risk/reward ratio still is slightly favoring floating.

Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds: +19bp

Mortgage backed securities continue to rally this morning and set new recent record low mortgage rates.  MBS prices are bucking up against resistance so caution must be adhered to, especially in this trading environment.  That being said, the charts are still looking favorable, though a retracement will be coming.  I will set forth all of the details in my BlogTalkRadio show on Monday at 11:00 ET, so be sure to be on as I will be more than happy to field your questions again this week.

Data today continued to be favorable, though Core CPI was a little hotter than expected.  The overall Consumer Price Index (CPI) was reported inline with expectations at –0.1% and that brings the year/year to 1.1%, well within acceptable limits.  Core CPI was reported at 0.2%, just above the 0.1% expected and its year/year sits at 1.0%, also well within acceptable limits and that is why the report is still favorable for MBS price growth.  Adding to that favorability was the fact Consumer Sentiment came in at 66.5, well below the estimates of 75.0.  Once again, we see inflation coming in tame, economic growth weakening and sentiment and confidence falling, all favorable to MBS prices moving higher and bringing lower mortgage rates.

What does this mean for Florida Mortgage Rates?  Mortgage rates are continuing to edge lower, setting new recent record low mortgage rates.  For now, the risk/reward ratio is favorable for floating and will likely do so into next week.  Check out Monday’s radio show for more on what lies ahead.

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds: +28bp

Mortgage backed securities held on to most of their gains yesterday and in t closing stretch they managed to close above the 10-day moving average.  As a result, the risk/reward ratio is now tilted in favor of floating again and the charts are painting a better picture, of course.  As you can see above, MBS prices continue to make gains this morning on the heels of more favorable data.

There are a number of reasons for today’s marked improvement.  Starting things off, inflation at the producer level was tame as the Producer Price Index (PPI) came in at –0.5% versus the –0.1% expected though Core PPI was inline at 0.1%.  Next up was the Empire State Manufacturing Survey which came in well below expectations with a 5.08 versus 18.0 reported.  Jobless Claims were reported better than expected at 429K versus 445K and that brought the 4-week moving average down to 455.25K, though it is still high.  Industrial Production was reported at 0.1%, higher then the –0.2% expected and Capacity Utilization was slightly higher than expected at 74.1%.  And the final bit of market-moving data was the Philadelphia Fed Survey which also was well below expectations, coming in at 5.1 versus 12.0.  Hey, but don’t worry since Ben Bernanke and Obama, along with some others, state that the markets are overreacting to the data and that the data is not portraying reality.   For those of us in the real world, however, the data points to a weakening economy, though it is still growing at the moment.  The good news is that this bad economic news sends money into “safe” investments and that drives MBS prices higher and lower mortgage rates.

Looking at the charts, we appear to be remaining in the sideways trading pattern and are now back to the top portion of that range.  I changed my stance for now, somewhat reluctantly, as momentum is favorable at the moment and with Stochastic indications out of the overbought spectrum, there is a potential to breakout to the high side.  Remember that the charts are still a little skewed from the earlier monthly mortgage bond coupon rollover and today’s move actually should be sending mortgage rates to new lows (may only be pricing wise), though very slightly.

What does this mean for Florida Mortgage Rates?  Mortgage rates are pushing lower still and pricing should be a new lows if they hold on today.  The risk/reward ratio is favorable for floating, but there are still some concerns and things can change quickly, so be ready just in case.