Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on November 25, 2009

Locking Stance: LOCKING    Mortgage Bonds: 3bp

Mortgage backed securities continue to push higher as Treasury auctions continue to come in strong.  Despite not getting a solid retracement, the charts have formed an uptrend, but stochastic indications till point to a retracement being needed.  That being said, if mortgage bonds negated the negated the last retracement, we may need only a retracement of the current move higher, which would point to the continuation of the uptrend.  However, if they still need that retracement, we would have a long way for MBS prices to fall.

As I stated, the move higher was due to the extremely strong results of the massive ($42 B) 5-year Treasury Note.  That indicates we may get another solid showing at today’s 7-year Treasury Note auction as well, which could boost MBS prices further.  The MBA Purchase Applications showed a change as Purchase Applications rose 9.6% and Refinance Applications fell 9.5%.  Durable Goods Orders came in at –0.6% versus expectations of 0.5%, though the year over year change has moved higher to –11.9%.  Removing transportation from the equation, the numbers were –1.3% and –11.3% respectively.  Jobless Claims came in below expectations at 466K, well below the estimates of 495K and the first time below 500K since the beginning of the year.  The 4-week moving average also fell below 500K to 496.5K.

The main story surrounds that of inflation, namely today’s Personal Income and Outlays report.  Personal Income was inline at 0.2%, bringing the year over year rate to –1.0%.  Consumer Spending was higher than expected, at 0.7% versus 0.5%, which brought the year over year rate to 0.9%.  But, the main market mover of the day was the PCE report (the Fed’s favorite gauge of inflation), which had headline PCE at 0.3% and Core PCE at 0.2%, the high end of the consensus.  The brings the year over year Core PCE up to 1.4% as inflation begins its journey back into the Fed’s target range of 1.5-2.0%. 

And the last sets of data to be released today were Consumer Sentiment and New Home Sales, which were just released, and also Crude Inventories, which will be released in about half an hour.  Consumer Sentiment rose to 67.4 and was higher than expectations of 67.0.  New Home Sales also beat expectations, 430K versus 410K, so maybe the housing market isn’t that bad after all.  Don’t forget we will be seeing the 7-year Treasury Note auction at 1:00.

Once again, looking at the charts, we see the need for a retracement as stochastic indications are essentially pegged at the top of the overbought spectrum.  We will likely see a move to test the support of the recent breakthrough (2 days ago) of the prior “tops”.  If we fall below that level, chances are we will see a significant move lower, at least a retracement of the full move higher.  The overall outlook is uncertain at the moment, though an uptrend has formed, which just needs to be reinforced before I can change stances.

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely edge higher despite the recent dip, though the outlook has become uncertain.  That is an improvement and may mean things will be looking better next week.  Have a good Thanksgiving.

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