Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on March 18, 2010

Locking Stance: LOCKING    Mortgage Bonds: 0bp

Mortgage backed securities remain in a state of limbo for the most part, still not deciding which direction they should be going.  The good news is that this limbo has resulted in a drifting higher in MBS prices, aka slightly lower mortgage rates.  The bad news is that MBS prices will likely not establish an uptrend and the best we appear to be headed for is a sideways trading patter, meaning mortgage rates vary somewhat, but holding fairly steady.

More data today on the inflation front, namely the Consumer Price Index, or CPI.  Overall CPI was reported at 0.0%, just shy of estimates of 0.1%, and that brings the year/year to 2.2%.  Core CPI (take out food and energy) was reported at 0.1%, inline with estimates, with the year/year at 1.3%.  The CPI report was quite favorable for MBS prices, but their lack of movement raises concerns over where mortgage rates are headed.  Even Jobless Claims, which was reported roughly inline with estimates at 457K, was not overly unfavorable.  Leading Indicators came in it 0.1%, just below estimates of 0.2%, chalking up another favorable report for MBS prices.  But we see one unfavorable report in the lot, the Philadelphia Fed Survey, which was reported at 18.9, better than the estimates of 18.0, though the report showed some concerns as well as some positives on the jobs front.

Looking at the charts, we see a mixed picture, showing the apparently confused state of MBS traders.  Stochastic indications are currently positive, though they are approaching the overbought spectrum.  With today’s generally favorable data, especially on the inflation side, the weakness shown is not favorable to MBS prices moving any higher from here and may even be setting up a slow downtrend pattern.  The 10-day moving average (short-term) is set to cross below the 100-day moving average, and maybe even the 25-day moving average in the coming days.  There is support at the 100-day MA, followed by the 25-day MA, and even another at the 50-day MA, all within 28 basis points of current pricing, meaning we should hold steady even if MBS prices fall today.  Of course, any significantly unfavorable set of news or data and some, if not all of these, support layers could fail.

What does this mean for Mortgage Rates?  Mortgage rates are still holding fairly steady and appear like they may do so, except for a slight move higher today and even the next few days.  The long-term outlook remains uncertain and does not look to be decided for at least a few more days.

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