Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on October 29, 2009

Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds: –16bp

Mortgage backed securities managed to close almost exactly at the top of their trading range yesterday, and that changed the picture of the future, though not etched in stone just yet.  I will provide the technical analysis, but let’s hit on the data first.

Yesterday saw another solid Treasury Auction, this one of the 5-year Treasury Note, though it was less than great when compared with other recent Treasury auctions, including the prior day’s 2-year T-Note auction.  The results helped mortgage bonds climb and hold their ground.  You can look at yesterday’s Florida Mortgage Rates – Midday Report for more data recaps from yesterday, but let’s talk about today’s data.

GDP was the main event thus far and it beat expectations.  Nevertheless, MBS pricing is well off its lows and showing signs of continued strength.  GDP came in at 3.5%, up from –0.7% last month and above estimates of 3.0%.  However, within the numbers is the inflationary factor, which was below expectations, giving mortgage bonds their strength.  The GDP Price Index (aka Chain Deflator) came in at 0.8%, which is up from the prior month, but well below estimates of 1.4%.  And while the economy is doing better, it is inflation that is the greater factor for mortgage backed securities traders.  Jobless Claims also were released and they were slightly higher than expectations, 530K versus 525K, with the 4-week moving average dipping to 526.25K.  This afternoon we will see the results of the 7-year Treasury Note auction, which will likely impact the markets as well.

As for the charts, which as you probably figured out is my passion, the picture is changing, though there remain some issues.  The 10-day moving average (MA) is turning upwards again, essentially bouncing off the 200-day MA and is now trying to positively crossover the 50-day MA.  However, MBS pricing is up against its resistance of the 25-day MA and has another retracement level of resistance slightly above that level.  Stochastic indications are good with a positive swing and plenty of upwards room to move on the slow side (longer term), but fast stochastic indications are turning negative and are on “middle ground” at the moment.  The bottom line is that the next day or two of trading are crucial for the future of Florida Mortgage rates.

What does this mean for Florida Mortgage Rates?  There are signs of improvement, meaning there is a potential for lower mortgage rates ahead.  However, there are still negative signs as well, so the outlook is uncertain, which is an improvement from prior indications.

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