Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 14, 2010

Locking Stance: CAUTIOUSLY FLOATING    Mortgage Bonds: +31bp

As I mentioned yesterday, things were looking positive, at least for the short-term and thus I switched stances.  Well, that was definitely the right call as mortgage backed securities are off to the races, albeit in a volatile way.

The main driving force is the direction of stocks as data was fairly benign overall.  Retail Sales was the main play, besides news, and it was reported at 0.4%, slightly better than estimates of 0.2%, but also well below the 1.6% last report.  When you remove autos, Retail Sales was still at 0.4%, just below estimates of 0.5%, and only down a little from 0.6%, so we see a fairly benign picture.  Industrial Production was also released and showed Production rose 0.8%, above estimates of 0.6% and the 0.1% last report, while Capacity Utilization was inline with expectations at 73.7%, a short rise from the 73.2% last report.  The only other potentially impactful report was Consumer Sentiment which was reported at 73.3, just below estimates of 73.8 but up from the 72.2 last reported.  We even had Business Inventories reported inline with expectations.  Still to come is Chicago Federal Reserve Bank President Charles Evans’ speech to the Illinois Wesleyan University Associates luncheon in Bloomington at 1:40.

Looking at the charts, we still have the same positive indications as yesterday, with the 25-day moving average edging ever closer toward a positive crossover of the 200-day MA.  However, stochastic indications are now turning positive and with them on middle ground, there is ample room to allow MBS prices to climb further and bring lower mortgage rates.  You still need to be very cautious as this market can, and sometimes does, turn in a minute.

What does this mean for Mortgage Rates?  Mortgage rates continue to edge slightly lower and it appears they will at least attempt to do so for the near-term.  The long-term outlook is still in question, but as the charts “stabilize”, the future of mortgage rates should become clearer.

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