Florida Mortgage Rates – Midday Report

by Florida's #1 Mortgage Planner on May 3, 2010

Locking Stance:  LOCKING    Mortgage Bonds: –28bp

Just finished with my weekly report at Lenderama and we are already seeing changes in the markets.  Data this week will hit hard and fairly steady through the week and by the week’s end, we will know if lower mortgage rates are fact or fiction.

Today started off with the Fed’s favorite gauge on inflation, the Core Personal Consumption and Expenditures Index, or Core PCE.  Core PCE, which excludes volatile food and energy just like Core CPI and Core PPI, came in at 0.1%, just above expectations of 0.0%, and matched headline PCE.  Headline PCE came in at 2.0% year/year, up from 1.8%.  However, the closer watched Core PCE was steady at 1.3% year/year, just below the Fed’s target range of 1.5-2.0%.  That means inflation is still subdued, and that MBS prices (and the Fed) happy.  Personal Income was reported at 0.3%, just below expectations of 0.4% and at 3.0% year/year.  Consumer Spending was reported at 0.6%, inline with expectations, and at 2.9% year/year.  Overall, the report signaled the economic recovery still taking place, and with consumers coming back, economists think the rate will become modest instead of anemic.  The ISM Manufacturing Index was reported at 60.4, below expectations of 61.0, though up from 59.6, so it is rather mixed for MBS prices.  Some minor good news is that Construction Spending rose 0.2%, beating expectations of –0.3% and improving slightly year/year to –12.3%.  The results of the 3-month and 6-month T-Bill auctions were just released as well, showing continued very strong results but with yields climbing slightly.

What does this mean for Mortgage Rates?  Mortgage rates edged higher this morning and have sunk a little as this report was being written.  Currently, both the short-term and long-term outlooks favor rising mortgage rates, though the short term may improve after a slight tick higher.  The long-term downtrend appears to remain intact and may prevent mortgage rates from even getting back to where they just were.

Leave a Comment

Previous post:

Next post: