Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on May 28, 2010

Locking Stance: LOCKING    Mortgage Bonds: +16bp

Greetings from Sao Paulo, Brasil this time.  I haven’t been here in about 1 1/2 years, so I will have to do some exploring later, but first we need to get down to business.

Once again, we saw a lackluster Treasury Auction as the 7-year T-Note, though this one was an improvement as the bid/cover rose to 2.88 and the yield actually dropped, down to 2.815%, but that was above the Coupon Rate of 2.75%.  Today saw the Fed’s favorite gauge on inflation, the Core Personal Consumption and Expenditures Index (PCE for short), which came in much like I forecast.  Core PCE rose inline with expectations of just 0.1% and the headline PCE was reported unchanged.  That brings year/year headline PCE unchanged at 2.0%, though Core PCE dropped to 1.2%, below the Fed’s target range of 1.5-2.0% and that gives the Fed leeway to keep their rates unchanged.  Also within the Personal Income and Outlays report was Personal Income, up 0.4% month/month and 2.5% year/year, and Consumer Spending, unchanged month/month and 4.6% year/year.  Besides Core PCE, Chicago PMI was the other main player in the direction of the markets today, with Chicago PMI’s Business Barometer Index coming in at 59.7, well below estimates of 62.0 and down from 63.8 last report.  And the last report of the day was Consumer Sentiment, which was essentially inline with expectations and last report at 73.6.

As you can see in the locking stance above, MBS prices are edging higher today, but I am not sure we got quite enough of a pullback to formulate a solid correction.  That being said, the charts remain looking good overall, with the exception of Stochastic indications, which still point toward more of a corrective move.  I will get into more of the technical analysis in my weekly Mortgage Market Update at Lenderama and on my new show at BlogTalkRadio.

What does this mean for Mortgage Rates?  Mortgage rates are holding fairly steady, even improving slightly today.  The near term still suggests a need for mortgage rates to edge a bit higher, though the longer-range forecasts do allow for mortgage rates to improve to possibly even retest their lows.

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