Florida Mortgage Rates – Morning Report

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

Locking Stance:  LOCKING    Mortgage Bonds: –34bp

Well, there was a brief, and I do mean brief, moment when I thought my stance may have been wrong.  Nevertheless, mortgage backed securities did manage to close the day slightly higher than when I reported yesterday, ending the day down just 31 basis points, and left a hint (if that) of hope that the sideways pattern would still be able to develop.  Well, the charts did not lie as things are still ugly.

This morning has already seen some data plays, namely the Consumer Price Index (or CPI).  The CPI came in higher than expectations with a showing of 0.2% instead of expectations of 0.1%.  Subsequently, the year over year change was slightly higher as well.  Get rid of that volatile food and energy and guess what.  Yes, it still beat expectations with the same numbers.  Remember, inflation is the archenemy of mortgage bonds, so MBS pricing is going to suffer anytime these numbers come in higher than expected.

Certainly not helping is the fact that the Empire State Manufacturing Survey showed its General Business Conditions Index jump way above expectations with a showing of 34.57 while estimates were expecting a drop to 17.5.  Jobless Claims are not helping either as they came in below expectations at 514K versus 520K with their 4-week moving average dropping to 531.5K.  Still to come are the Philadelphia Fed Survey, the last glimmer of hope for MBS prices and mortgage rates, and Crude Inventories, along with a speech from Tim Geithner at 4:15.

Also, in case you haven’t already heard, yesterday’s FOMC Minutes, aka the “Fed Unplugged”, showed dissention in the ranks that may very well be growing.  It showed that some Feds believe that the Fed needs to tighten policy sooner rather than later (maybe before the dollar is completely worthless) while others think a weak recovery might cause a dangerous downturn in prices.  Hum, weak dollar plus hyper-inflation down the road or we can ensure that carton of milk doesn’t get priced less in dollars by allowing the dollar to lose value around the rest of the world.  Wait, isn’t that still inflation?  Oh yeah, that type of inflation cannot be perceived by the general population so it is OK.

What does this mean for Florida Mortgage Rates?  Mortgage rates are on the rise and the outlook grows more and more favorable for higher mortgage rates, again.

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