Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 15, 2009

Locking Stance: LOCKING    Mortgage Bonds: -12bp

Mortgage backed securities managed another slight rally yesterday, ending the day up 12 basis points, but beaten back by resistance overhead, namely their latest MBS pricing peak.  This surge higher is both good news, and potentially bad news.  The good news being that the downtrend is no longer “solid” and that it appears mortgage rates will remain in their recent trading range.  Today’s CPI data will be the real kicker of where the week ends, and ultimately where mortgage rates hold.  Will inflation be tame, or will the lion be unleashed?

As for the CPI (Consumer Price Index), it was released just a few moments ago.  And what did it show?  Well, interestingly it was a little opposite of PPI, though that isn’t really surprising.  Remember that Core PPI was inline with expectations yesterday, but adding in food and energy brought higher than expected inflation readings.  It takes a while for that to “pass through” to consumers if producers are successful at doing so.  Now, for today’s CPI data, overall inflation was read at 0.0%, inline with expectations, but Core CPI was considerably higher, coming in at 0.3% versus expectations of just 0.1%.  With food and energy climbing recently, that is not a good sign for inflation down the road, and that will be bad news for mortgage backed securities and mortgage rates.

Other data playing out today is that of the Empire State Index, which came in at –4.6 versus expectations of –12.0, so it beat expectations as well by being less “crappy” than expected.  Later today will see Industrial Production and Consumer Sentiment, along with a “Loose Lips” Fisher speech.  Will the 25-day moving average hold? 

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely climb today as they maintain a “range”.  If anything changes, I will get another report online.

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