Florida Mortgage Rates – Midday Report

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

Locking Stance: LOCKING    Mortgage Bonds: +3bp

Mortgage backed securities are still trying to break the potential sideways pattern, but odds remain unfavorable for their success.  Looking at the recent run up that lacks a retracement shows this very clearly.  Of course, other things are indicative as well.

MBS prices are not moving much at all today as you can see.  That is a serious problem for the future because today was the release of the Fed’s favorite gauge on inflation, the PCE report (Personal Consumption Expenditures Index).  Today’s PCE report showed inflation was inline with expectations, coming in at 0.0% and at 1.4% year/year, which was lower than last reading.  Personal Income was well below expectations, coming in at 0.1% versus 0.4%.  Consumer Spending was above expectations, coming in at 0.5% versus 0.4%.  Overall, the entire Personal Income and Outlays report was very favorable to mortgage backed securities, but they are failing to move higher.  The ISM Manufacturing Index is another “biggie” and was released today.  The ISM Manufacturing Index also was favorable for mortgage rates, coming in at 56.5 versus expectations of 57.5.  Even this morning’ short-term Treasury Auctions went favorably for MBS prcies.

Part of the reason MBS prices aren’t climbing is that Richmond Federal Reserve Bank President Jeffrey Lacker is stating that there is little to no chance of a double dip recession.  He is also saying there is no need to make a decision on the Fed’s exit sequence though it is natural to start at asset sales.  Looking at the charts, you can see that the “rubber band” is stretched considerably right now and is keeping MBS prices from pushing higher.

What does this mean for Mortgage Rates?  Mortgage rates should be dropping right now, but they are holding steady.  For the long run, it still appears that a mortgage rates will be trapped in a sideways pattern.

(On a side note, my hosting service migrated my sites to a new server and damaged several of them in the process, including the new one, MBS Commentary, which I hope will be back soon.)

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