Florida Mortgage Market – Morning Update

by Florida's #1 Mortgage Planner on March 18, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  -16bp

What a day mortgage backed securities had yesterday, ending the day up 150bp!  More importantly, they closed above their resistance level of the  Feb 29th price and are above all moving averages at this point.  However, they are getting to an overbought condition and have pushed higher considerably quickly, indicating a need for at least a small correction.

Today may be the day they get that correction.  First, PPI came out this morning and was far above estimates at the Core level, so inflationary concerns should be felt in the markets.  The PPI overall was in line with expectations, coming in at 0.3%.  Core PPI came in at 0.5%, well above estimates of 0.2%.  It is important to note that, just like the CPI last week, this data is last month’s data and the next report will likely be considerably worse due to increased food and energy in the last few weeks.

Adding fuel to the fire, this afternoon the Fed will make its rate cut announcement.  The consensus has moved to a full 1 point cut (1.00%), which will likely send mortgage bonds lower (interest rates higher).  Remember, the Fed rate decision generally causes mortgage rates to move in the OPPOSITE direction, so a rate cut typically pushes mortgage rates higher.

Stay tuned this afternoon and we will make the announcement of the Fed’s decision available and how the markets reacted.

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