Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on April 13, 2010

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +19bp

Yesterday, I mentioned there was plenty of negativity to be seen in the charts, but also that the charts were skewed and, thus, not overly foretelling.  As I mentioned in my weekly Mortgage Market Update, and in yesterday’s report, MBS prices would have to rally yesterday to change the forecast, which is exactly what they did. 

So what happened yesterday to really get mortgage bonds moving higher.  Well, at least in part, were the very strong results of the 3-month and 6-month T-Bill auctions, both turning the tide from last week’s results with higher bid/cover ratios and lower yields as well.  Since there are no other Treasury auctions this week, this momentum will continue until data can muzzle it. 

Data today included some small and medium impacting reports.  The ICSC-Goldman Store Sales report showed Store Sales rose just 0.1% and the year/year rate dropped to 4.0%.  The Redbook report showed similar results as year/year Store Sales dropped to 3.3%.  Import and Export Prices were also released with Export Prices rising 0.7% month/month and 4.6% year/year, both significantly higher.  Import prices also rose, up 0.7% month/month and 11.4% year/year.  The rises are mostly due to oil prices.  The most impactful report this morning thus far is the International Trade report.  The International Trade Report showed the Trade Balance Level at $-39.7B, just below expectations of $-39.0B and down from $37.3B.  The report suggests that businesses are more optimistic about domestic demand, with businesses appearing to be in a restocking mood, which is favorable for the economy.

Still to come today, we will see the following speeches:

  • 10:45 – Federal Reserve Gov. Daniel Tarullo addresses financial regulation at the Council of Institutional Investors meeting in Washington.
  • 12:45 – Treasury Secretary Tim Geithner gives remarks and answers questions at the American Society of News Editors NewsNow Ideas Summit in Washington.
  • 7:00 – Federal Reserve Chairman Ben Bernanke addresses financial literacy at the National Bankers Association Foundation Literacy summit in Washington.
  • 7:15 – Richmond Federal Reserve Bank President Jeffrey Lacker speech on the economic outlook to West Virginia business leaders in Morgantown, WV. Press conference follows event.

Data really starts picking up tomorrow, so today may be the last floating opportunity, and that is only if MBS prices manage to continue their climb.  Right now, MBS prices are trying to successfully break through their 25-day moving average, which will be needed to break the overall medium-term trend.  Stochastics have turned positive and the short-term outlook has changed with the breakout above recent price peaks in MBS prices.  We still need to use extreme caution as there are still plenty of negative indications that will need to be overcome, but lower mortgage rates may be in the future, at least in the near-term.

What does this mean for Mortgage Rates?  The overall outlook is still fairly negative, but is becoming less favorable for mortgage rates climbing.  The short-term outlook indicates the potential for lower mortgage rates, while the overall trend currently still favors higher mortgage rates long-term, but may be changing.

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