Locking Stance: LOCKING Mortgage Bonds: +22bp
Mortgage backed securities are trying to rally and the charts are showing uncertainty at this point. MBS prices are trying to break the downtrend, but are unable to do so thus far, which leaves us in a peculiar position. Do we continue the downtrend in MBS prices, does a sideways pattern develop, or can we actually get an uptrend going again? Well, the latter two have many variables working against them, so the risk/reward ratio remains unfavorable.
Today was a big inflation day, though not related to the Fed’s favorite gauge on inflation which is Core PCE. The Consumer Price Index (CPI) was released today and came in at 0.3%, inline with expectations and brings the year/year to 1.2%, far from a concern. Core CPI, which removes volatile food and energy prices, came in at 0.0%, below expectations of 0.1% and that kept its year/year at 1.0%. Overall, this report was certainly favorable for MBS prices, hence the reason they are attempting to break their “leg”, downward that is. Consumer Sentiment was just released and came in at 66.6, below expectations of 70.0 and down from last report’s 68.9. Another “win” for MBS prices to say the least, so today may yet play out favorably, but with the shrug off of this morning CPI data (MBS prices jumped and then fell back), the risks are just not acceptable at this point.
What does this mean for Florida Mortgage Rates? Mortgage rates were attempting to move lower this morning, but appear to be failing in that attempt. Overall, the outlook remains most favorable for mortgage rates moving higher.