Locking Stance: LOCKING Mortgage Bonds: -22bp
Greetings from Barbados… Mortgage backed securities turned lower yesterday as we expected. As we have stated before, we cannot understand why some “gurus” recommend floating when the charts do not back their own recommendations, thus costing their clients thousands of dollars each (which we are certain gets past on to their clients). MBS prices continue their decline today, though they are getting some support at the moment along their 50-day moving average.
Plenty of data today and the overall results were mixed, with the more impactful report actually being favorable for MBS prices and mortgage rates, thus keeping them from a total demise today. Jobless Claims came in slightly better than expected at 450K versus 455K, though that drops the 4-week moving average down to 464.75K. Producer Price Index (PPI) was released and was higher than expected at 0.4% versus 0.3%, though Core PPI was inline with expectations of 0.1%. Overall, generally unfavorable for MBS prices in these reports. However, the big surprise was the Philadelphia Fed Survey, a major report which results should be sending MBS prices higher, not just breaking their fall. The Philly Fed came in at –0.7%, the second negative in a row, and well below estimates of –3.8%. The only positive aspect of this report in regards to the economy (and it is a stretch) is that it was less negative than before. Remember we mentioned that traders are back into that philosophy of “less bad” is the “new good”. We also have seen Federal Reserve Gov Elizabeth Duke remarking at a hearing on the Home Mortgage Disclosure Act at the Chicago Fed and Treasury Secretary Tim Geithner testifying on the foreign exchange report before the Senate Banking Committee in Washington.
What does this mean for Florida Mortgage Rates? Mortgage rates continue to rise and the outlook as we have mentioned before remains most favorable for them to continue to do so.