Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on June 3, 2010

Locking Stance: LOCKING    Mortgage Bonds: -3bp

Mortgage backed securities ended flat yesterday, right on their 10-day moving average and having failed to break free yet again.  That marks three straight failed attempts to break back above their 10-day moving average since falling below it last Thursday.  The problem, as I mentioned before, is that it sets up the potential of a new pattern, one that does not bode well for mortgage rates remaining low.  Currently, MBS prices have rebounded from their lows, so another attempt may be made on their 10-day moving average.

Today is the “Day Before”, or simply the day ahead of the monthly Jobs Jamboree due out tomorrow.  Due to the Memorial Day holiday, today saw the release of the ADP Employment Report along with the weekly Jobless Claims, so traders’ reactions are likely to be short-lived as they have been, rather waiting until the “real” numbers tomorrow.  The ADP Employment Report came in at 55,000, lower than last month after last after it was revised higher to 65,000.  In a timely manner, this report was offset somewhat by Atlanta Federal Reserve Bank President Dennis Lockhart’s speech on the economic outlook at the Atlanta Technical College Business & Industry breakfast.  Mr. Lockhart talked about the need to begin raising rates is in the future and not yet, consistent with what I have been saying lately.  One interesting bit is that he stated that interest rates may have to rise even before the jobs situation improves substantially.  Hmmm, seems a bit like the Great Depression, doesn’t it?  Are you ready for 1932?  Onward to Jobless Claims, which came in at 453K, just above the consensus of 450K and edging the 4-week moving average back up to 459K.  Going into tomorrow, expectations will not be very strong and that means a strong report will kill MBS prices.

Continuing with data, We saw Nonfarm Productivity at 2.8%, below the 3.4% expected and Unit Labor Costs were inline at –1.3%.  Factory Orders were up 1.2%, but were below expectations of 1.8%, though the prior report was revised upwards to 1.7%.  The ISM Services Index came in at 55.4, just below expectations of 55.9.  One note within this report is that employment rose above 50 for the first time this cycle.  The Monster Employment Index edged up 1 to 134, showing the best year/year gain since April 1997 at 13.6%.  Coming up shortly is the Treasury’s Announcement of the upcoming Treasury Auctions.  This next week will see more auctions of the 3-year T-Note, the 10-year T-Note and the 30-year T-Bond.  Federal Reserve Chairman Ben Bernanke will remark at Chicago Federal Reserve Bank conference on small business finance in Detroit (11:!5), Kansas City Federal Reserve Bank President Thomas Hoenig will speak to the Bartlesville (Oklahoma) Chamber of Commerce (1:15) and Dallas Federal Reserve Bank President Richard Fisher will be speaking on banking issues to the Southwestern Graduate School of Banking in Dallas (8:45).

What does this mean for Florida Mortgage Rates?  Mortgage rates edged higher as the day started, but may improve as the day moves on, though that is questionable.  Overall, the risk/reward ratio remains unfavorable for floating and we may have mortgage rates climbing again soon.

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