Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on December 4, 2009

Locking Stance: LOCKING    Mortgage Bonds: –47bp

I wanted to wait and see if the dust would settle, so-to-speak, after the Jobs Jamboree was released this morning.  While the ADP Employment Report suggested a better than expected Jobs Report today, no one was ready for what was released and mortgage backed securities are suffering for it.

Here are the four sets of numbers released in the monthly Jobs Jamboree…

 

Actual

Concensus

Prior

Nonfarm Payrolls

-11,000

-100,000

-190,000

Unemployment Rate

10.0%

10.2%

10.2%

Hourly Earnings

0.1%

0.2%

0.3%

Average Work Week

33.2 hrs

33.1 hrs

33.0 hrs

With only 11,000 jobs being lost, compared to expectations of 100,000 being lost, coupled with the Unemployment Rate dropping to 10.0%, the jobs front appears to be improving and that does not bode well for MBS prices.  As if that was not a big enough surprise, the prior two months of Jobs Reports were revised upward (less worse) by a total of 159,000!!!  Any wonder why mortgage bond prices are heading sharply south?

Since there is no other significant data plays today, it will be up to the speeches by Charles Plosser at 10:00 and James Bullard at 1:15 to see if MBS prices can hold their ground.  If you remember, I have been saying that the prior move higher did not see a genuine retracement and we would need to see MBS prices fall to at least their 25-day MA, we are now well below that level. In fact, we are now testing the 50-day MA and possibly showing a complete trend reversal and thus a significant change to the outlook of future mortgage rates, which is why I held to a locking stance even thought the future still favored lower mortgage rates.  We are now sitting at just over a 50% retracement of the entire move higher, not just the last leg, which is good, though the momentum created today may cause a complete change in the picture.  The next few trading days will determine the outlook.

What does this mean for Florida Mortgage Rates?  We are finally seeing mortgage rates edge higher, enough to possibly swing back lower, though the outlook has become “cloudy” based on today’s momentum shift.  If mortgage rates hold and improve from here, the outlook will remain favorable for lower mortgage rates, though a failure to hold here will indicate higher mortgage rates moving forward.  The risks continue to outweigh the potential rewards.

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