Florida Mortgage Rates – Afternoon Report

by Florida's #1 Mortgage Planner on February 1, 2010

Locking Stance: LOCKING    Mortgage Bonds: -16bp

Sorry for the delay in getting this report online, but I am in Brazil and was without the internet for a while.  I hate when that happens, which fortunately is not very often.  Nevertheless, as I thought might happen last week, I am back to my locking stance as things could get ugly once again.  Let me explain some more…

Data this morning included the Fed’s favorite gauge on inflation, the Personal Consumption and Expenditures (PCE) Index, a part of the Personal Income and Outlays report.  Core PCE was reported inline with expectations at 0.1% though the year/year change edged slightly higher to 1.5%.  Not a bad report overall, though hints of rising inflation can be seen and we are now in the bottom edge of the Fed’s 1.5% – 2.0% target range.  Personal Income was higher than expected, coming in at 0.4% versus 0.3% and the year/year change rose to 0.5%.  Personal Spending was lower than expected at 0.2% versus 0.3%, though its year/year change rose to 4.0%.  The reports overall weighed on MBS prices.  The ISM Manufacturing Index, however, came in considerably better than expectations with a 58.4 versus the 55.0 expected.  The Treasury auctions still are seeing strong demand and that is keeping mortgage backed securities from collapsing, but their demand is easing slightly.

OK, looking at the charts, we are now off another "peak" which was below the last "peak" and appears to be the beginning of a downtrend.  It is still too early to say that convincingly, but stochastic indications remain in the overbought spectrum, indicating the need for MBS prices to edge lower.  Add to that the fact that the 50-day has now crossed below the 100-day, a negative sign of things to come.  The bottom line is that the glimmer of hope we saw begin to shine as the week ended may be getting snuffed this week.

What does this mean for Mortgage Rates?  Mortgage rates are seeing pressure to rise and the outlook is once again turning ugly.  We are back to just a glimmer of hope for lower mortgage rates, and even that may get extinguished this week.

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