Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on April 9, 2010

Locking Stance: LOCKING    Mortgage Bonds: –12bp

Well, it looks like I was right in that the rally fizzled out and the corrective move is over.  Now we must wait to see if MBS prices can keep from creating the next leg lower, though that may be exactly what happens.

The only economic report on the docket today was the Wholesale Trade report, which typically does not affect the markets much.  Wholesale Trade measures the dollar value of sales made and inventory held by merchant wholesalers, and this report showed inventories rose 0.6%.  The good news is that there are no more Treasury Auctions.  Actually that may be bad news as this week’s Treasury auctions went well despite rising yields, including the 30-year T-Bond yesterday.  Yesterday’s 30-year T-Bond auction saw solid results, with a bid/cover of 2.73 and yields rose slightly to 4.770.

Looking at the charts and we see plenty of negativity remaining, and that signals a fairly strong desire to start the next leg lower in MBS prices, thus higher mortgage rates.  The 10-day moving average seems to have been the cap of this last retracement and is now trying to push MBS prices lower again.  The 25-day MA is rushing down to meet that 10-day and keep it company.  The 50-day MA is set to cross below the 200-day MA and the 100-day MA is turning to follow its lead as well.  And looking at stochastic indications does not provide any hope either as it is turning negative and is on middle ground, meaning there is plenty of room to fall.

What does this mean for Mortgage Rates?  Mortgage rates are back on the rise for the short-term, as I suspected might happen.  The long-term outlook remains solidly in favor of higher mortgage rates.

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