Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 27, 2010

Locking Stance: LOCKING    Mortgage Bonds: –47bp

Mortgage backed securities finally look like they are giving in to the corrective move as they are down considerably this morning.  Just as I predicted yesterday, after all of the see-sawing back and forth, MBS prices closed just 3 basis points lower after the 5-year T-Note auction failed to provide any real direction as it was also soft and mixed results.

This morning started off with the GDP report, which showed Real GDP at 3.0%, below the consensus of 3.5%.  The first quarter GDP was revised down slightly to 3.0% as well.  The GDP Price Index, aka Chain Deflator, came in at 1.0%, just above estimates of 0.9%.  Jobless Claims came in at 460K, above estimates of 450K, though down from the revised 474K in last week’s report.  The 4-week moving average edged slightly higher to 456.50K.  There is not much else to follow except for this afternoon’s 7-year T-Note auction, which we will see the results released at 1:00.  Judging by the last two Treasury Auctions, I wouldn’t expect to see solid results in this auction either.  MBS prices are again moving opposite of stocks, which are currently rallying back off their support at around 9800.

Looking at the charts, we can see that MBS prices are heading lower in what will likely be a retracement, or correction.  With the 10-day moving average having moved higher, don’t forget the level it was at when I mentioned it, as that is the required level for a solid retracement, not the current level of the 10-day MA.  The 50-day and 100-day MAs are still aiming at crossing above the 200-day MA and the 25-day MA is now nearly where the correction will need to find support.  In simpler terms, MBS prices will likely pullback to their 25-day moving average, then attempt to bounce off, completing the correction, and try another leg higher.  With the solid resistance MBS prices met recently, there are concerns whether or not this will be true, however, the charts look good at the moment.

What does this mean for Mortgage Rates?  Mortgage rates are finally edging higher in a corrective move.  The short-term outlook is for mortgage rates to edge lower after this correction is completed and the longer-term remains favorable for fairly steady to lower mortgage rates.

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