Florida Mortgage Rates – Morning Report

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

Locking Stance:  CAUTIOUSLY FLOATING    Mortgage Bonds: +22bp

Mortgage backed securities are attempting to push ever higher and send mortgage rates even lower.  Their rally has held thanks to the support of their rising 10-day moving average.  I will get more into technical indications later, but let’s get down to the data.

First off, yesterday’s Treasury Auction was strong, but not spectacular, leaving MBS prices wondering if it was good enough.  Jobless Claims were released this morning, coming in just above estimates while maintaining 444,000.  The 4-week moving average has now dropped to 450.5K with continuing claims edging higher to 4.627M.  Despite last week’s Jobs Report showing job growth, the jobs market is still in question with claims being this high.  Import and Export prices came in showing Export prices up 1.2% month/month and 5.7% year/year, both higher than last month, and Import Prices rose 0.9% month/month and 11.1% year/year, the latter being a drop from last month.  Federal Reserve Vice Chair Donald Kohn is on panel on lender of last resort at the Centre for Monetary and Financial Economics Conference in Ottawa, discussing the Federal Reserve’s Policy actions during the financial crisis and lessons for the future.  Still to come are speeches from Minneapolis Federal Reserve Bank President Narayana Kocherlakota  to Eau Claire business leaders in Altoona, Wisconsin (12:00), Federal Reserve Chairman Ben Bernanke in Q&A session with Philadelphia Fed Deputy Chair Jeremy Nowak at the bank’s conference on community development (12:30) and Dallas Federal Reserve Bank President Richard Fisher on the Fed and the economy to a community forum hosted the Dallas Fed’s El Paso branch in Odessa, Texas (1:15).  Once again, today’s main event will be the Treasury Auction of the day, this being the 30-year T-Bond, which we will see the results of at 1:00.

Looking at the charts, we still need to take them with a grain of salt, but they are looking fairly positive.  As mentioned, the 10-day moving average has been holding as a rising support layer, but that is not the only positive.  The 25-day MA has now crossed above both the 50-day and 100-day MAs, with its eyes beginning to focus on the 200-day MA, just 14bp above.  Stochastic indications have moved lower and are now just below middle ground, allowing plenty of room for MBS prices to climb.  While there are positive signs, there are still concerns.  One is that MBS prices remain unable to break free of their current sideways pattern, and will need to break tough resistance to do so.  Additionally, the charts have been skewed by two events in the last week and therefore cannot be fully trusted.

What does this mean for Mortgage Rates?  Mortgage rates are edging slightly lower today so far.  Floating is still not for the faint-hearted, but those willing to risk may reap a reward by floating.  Today’s Treasury Auction will be one key.  The short-term outlook remains fairly positive and the long-term outlook is still unclear.

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