Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on February 12, 2010

Locking Stance: LOCKING    Mortgage Bonds: +16bp

You just have to love this market right now….not!  Mortgage backed securities tried hard to break below their 200-day moving average and stay there, but yesterday’s push failed and they closed higher, up about 10 basis points.  Then today, they mounted another rally out of the starting gates, but, as expected, the falling 10-day is causing the rally to fade.  Time will tell, but if you have been fallowing my reports, you knew this move higher was coming and most likely would just be a corrective move.

So what’s happened in the last 24 or so hours? Well, we saw another disappointing Treasury Auction, this being the more important 30-year T-Bond.  But, since we have seen such a dramatic drop in MBS prices, traders began to by, whether to cover short positions or otherwise, and the correction began.   The delayed Retail Sales report was released this morning and was inline with expectations, an marked improvement over last month, and showed continued weakness in housing related items.  The last three months show retail sales being moderately strong by below the typical recovery pace.  Consumer Sentiment was slightly below expectations, coming in at 73.7 versus 75.0 expected, and just below the last report of 74.4.  Since the data is relatively benign, MBS prices are following the stock market lead, moving higher as stocks fell due to Chinese measures to cool their economy.

Looking at the charts, as I prefer, we see that the push in MBS prices up to their 10-day MA completes a solid retracement, allowing for the potential of downward movements in MBS prices, and higher mortgage rates.  Stochastic indications have moved dramatically toward the oversold side of the charts, though they still have plenty of room to move lower.  The 10-day MA failed to cross above the 100-day MA, rather bouncing off and heading lower again.  The 50-day MA continues to fall and the 25-day is attempting to crossover right now but may also turn lower.  Overall, the charts signals continue to favor higher mortgage rates (lower MBS prices).

What does this mean for Mortgage Rates?  While mortgage rates edged lower this morning, as expected in the short-term, the long-term picture remains most favorable for higher mortgage rates.

(Don’t forget these reports are also available at MBS Commentary under “Blog”)

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