Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on September 18, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  -16bp

Mortgage bonds opened lower this morning on more news of financial crisis at larger financial institutions.  Now, Morgan Stanley is seeking a buyer and not just WaMu (Washington Mutual).  With the AIG bailout failing to calm the markets and this morning’s news signaling more to come, market uncertainty is sure to follow, in both mortgage bonds, and in stocks.

If you remember me talking about the retracement of bond prices last week, we have seen similar large moves in the stock market and they will need to retrace their steps before continuing lower.  As this retracement occurs, bonds will be under selling pressure.

Initial Jobless Claims were higher than expected again this week, signaling more bad news in the job market.  With unemployment already at 6.1%, next month’s figure could rise significantly as well and that would be good for mortgage backed securities.

At 10:00, we will see the LEI, but more importantly, we will see the Philadelphia Fed Index which typically moves the market. 

A couple of words of caution need to be told.  Bonds are “trapped” in a small trading range and are looking to break free one way or the other, having tested support and resistance several times each.  Right now, it appears that that break out favors to the downside or prices (higher mortgage rates).  If bonds can get a good boost from the Philly Fed Index or elsewhere, we may see that break out occur to the upside.  One of the problems we are facing though is that today is the last day for data for nearly one week, so if we don’t get it from data today, we may see bonds suffer or remain “trapped” for a while.

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