Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 14, 2009

Locking Stance: LOCKING    Mortgage Bonds: –3bp

Mortgage backed securities faltered a little yesterday since the Florida Mortgage Rates morning report was released, ending the day up only 13 basis points.  More importantly, they failed to hold above their 25-day moving average and now look to be setting up a definitive downtrend (lower closing price peaks).  If they fail to gain ground, which is most likely the case as inflation makes its way back into the headlines, then the downtrend will be virtually solidified as I have been talking about was coming.

Speaking of inflation, this morning saw the first glimpse of the inflation reports due out, the Producer Price Index (PPI).  As I discussed yesterday, inflation would be growing, all you needed to do was look at he gas prices and food prices and if it didn’t show up now, it would next month.  Well, it is already showing up, and next month could be worse.  This morning’s PPI report came in at 0.3% versus expectations of 0.1%.  That is a big miss, but will producers be able to pass the increase on to consumers?  Take out food and energy and it was inline with expectations of 0.1%.  The good news for MBS pricing today is that traders don’t bet on PPI numbers much, rather they wait until the CPI tomorrow and the PCE later.

Also this morning, Jobless Claims were released, and guess what?  Yep, they surprised the markets in the same way as Retail Sales did, by being worse than expected.  Jobless Claims came in at 637K versus expectations of 609K, and brought the 4-week moving average back up to 630.5K, and that will be good news in the mortgage bond pits.  So, overall we saw news that could send the markets either way, and this on a day that has MBS pricing teeter-tottering along their 25-day moving average.  My guess is that pricing will ultimately hold steady today, awaiting tomorrow’s CPI report or other news to get traders in a buying or selling mood.

What does this mean for Florida Mortgage Rates?  No real direction yet, but odds still favor higher mortgage rates at the moment from what I can see.  I will let you know if the outlook changes.

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