Locking Stance: CAUTIOUSLY FLOATING Mortgage Bonds: +47bp
What an interesting week we had while I was “away.” I covered it and what lies ahead this week in today’s radio show. It is definitely good to be back in a position I can watch the markets closely and provide the best commentary possible. This morning shows mortgage backed securities attempting to establish a new trend still as one has yet to be etched in stone, or at least clearly shown in the charts. We did see them break the downtrend last week and they may be able to get an uptrend going this week.
The only data today was the Chicago Fed National Activity Index, which came in at –0.42, down from –0.17, led by declines in production and employment related indicators. Data certainly is not pointing towards the end of the recession as the NBER announced last week. Of course, they were saying it ended back in June, 2009. I guess the data didn’t get the memo. We also saw the weekly short-term Treasury Auctions, which continue to be very strong, which is not surprising. At 1:00, we will see the results of the first longer-term Treasury Auction, the 2-year T-Note, which we expect will go well. Any surprises here, though, could send MBS prices lower.
We will omit the technical analysis today as it was covered in today’s radio show, so listen to it as it could get very interesting by week’s end. Plenty of data will be hitting the airwaves, and sending ripples through the markets as the week draws to a close. We will only say that we should be seeing a clear trend by week’s end.
What does this mean for Florida Mortgage Rates? Mortgage rates have edged lower this morning and may continue to do so. Currently, the risk/reward ratio favors floating, but not overwhelmingly, so exercise caution. The long-term outlook is not “for sure” right now, but that “crystal ball” should clear up by week’s end.