Locking Stance: LOCKING Mortgage Bonds: +6bp
Mortgage backed securities have edged back above their 25-day moving average, though not very convincingly, being only 6 basis points above that level currently. The data began to flow this morning, as did the Fed Speak.
Big Ben started off the day with a speech titled Four Questions about the Financial Crisis. Then came the Producer Price Index (PPI) and the biggie, Retail Sales. The PPI was considerably less than expected overall, coming in at –1.2% versus expectations of 0.1%. Even at the core level, PPI was less than expected at 0.0% versus 0.2% with an annual rate of 3.8%, a slight tick down from last month. Retail Sales was the kicker, coming in well below expectations as well with a –1.1% reading versus expectations of 0.3%. Take autos out of the equation and it is still bad with a reading of –0.9% versus 0.0%. Obama is set to speak at 11:30, which could add to market sentiment.
Now, with the data this morning, MBS pricing should be doing better than they are, indicating the continued market sentiment towards higher mortgage rates. No doubt the Fed is purchasing MBS as they were a leading force behind the Treasury Auctions yesterday, having purchased nearly $7.5 billion. Additionally, they purchased $5.15 billion in MBS.
What does this mean for Florida Mortgage Rates? Market forces continue to desire higher mortgage rates, though Fed actions appear to be keeping them steady for the time being. The outlook is uncertain for now.