Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on October 30, 2009

Locking Stance: LOCKING    Mortgage Bonds: +22bp

As you have probably noticed, I am not one that is typically quick to change stances just because of a quick move, or even a big one.  That is unless the charts warrant it.  Yesterday was a pretty good example. 

Mortgage backed securities dropped significantly yesterday, but they held above their 50-day MA, though they did drop below it for a while.  I had my update written just in case, but never saw the need to post it as MBS pricing rebounded, retested that level, and rebounded again.  The collapse of mortgage bond pricing yesterday was due to a lackluster 7-year Treasury Note auction, which I had discussed might happen earlier in yesterday’s Florida Mortgage Rates – Morning Report.  But I also mentioned the charts were turning more positive, hence why I was reluctant to change stances so quickly, like others whom rushed to announce to the world to lock every loan.

Now, that brings us to today, which I will get into the technical indications in a moment.  In the meantime, let’s hit on today’s data.  Personal Income was inline with expectations at 0.0%, as was Consumer Spending at –0.5%.  That means that Core PCE (personal Consumption Expenditures) was also inline at 0.1%, which is good news for mortgage rates.  Consumer Spending was expected to drop off significantly as a result of the cash-for-clunkers deal expiring, so the drop is somewhat skewed, as was last month’s data.  On the year over year levels, Core PCE and Consumer Spending were the same as last month, while Personal Income edged slightly lower.  The Employment Cost Index (ECI) is another reason MBS prices are up today as the numbers were below estimates, coming in at 0.4% on a quarterly basis and 1.5% on a year over year basis.  We still have Chicago PMI to deal with, as well as Consumer Sentiment, both coming out at 9:45 and 9:55 respectively.

As for the charts, as I said, the 50-day MA is holding strong as support, and is moving higher.  The problem is the 25-day has been holding as strong resistance as well, and is flattening out, meaning the gap is shrinking.  That means a breakout is coming, the question being which direction.  At the moment, things are still looking mixed, but the negative patterns are making some ground right now, especially in the longer term outlook, so if MBS pricing does not bode well today, you can bet that change of stance is coming.

What does this mean for Florida Mortgage Rates?  Mortgage rates are slightly higher than they started the day yesterday, but lower than where they ended the day yesterday.  The next day or two remains crucial as to the future of mortgage rates, but while the future remains uncertain, odds are moving back in favor of higher mortgage rates.

Leave a Comment

Previous post:

Next post: