Florida Mortgage Market – Morning Update

by Florida's #1 Mortgage Planner on May 30, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  +25bp

I decided to wait a while to provide this update to add the Chicago PMI to the post.  This morning’s PCE data gave bonds a little boost, but they already were backing off highs before the Chicago PMI hit the airwaves.

The PCE data came in right in line with expectations, both at the overall and core levels.  Personal Income and Spending were in line as well, and that got the media into a frenzy over tame inflation, even if it is still above the Fed’s target range.  Be wary though as this data is “old” and recent inflationary pressures have not been shown in data yet.

The Chicago PMI came out beating expectations, yet another indication that the economy is not doing as bad as everyone has been led to believe.  That adds to the inflationary pressures as price wholesalers can pass on increased costs to consumers in a good economy, even the “poor” airlines.  The reading was still below 50, but it is moving higher, signifying the economy may be improving.  Even Consumer Sentiment beat expectations, slightly.

While bonds have moved higher, I feel they will not be able to punch through their 200-day moving average, which is now resistance.  This move higher is most likely a short term correction before the new downtrend continues, so locking is the best option right now.

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