Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on October 31, 2008

Locking Stance:  CAUTIOUSLY FLOATING     Mortgage Bonds: +41bp

Today was the big data day (except for the Fed decision back on Wednesday) and big it was.  We had a couple of major players today with the ECI and PCE, and a couple of others as well.

First off, the Fed’s favorite gauge on inflation (Personal Consumption Expenditures, or PCE) came in at 0.2%, so it is running steady, though the yearly rate is still above the Fed’s “comfort zone” at 2.4%.  It’s yearly rate did jump a bit from last month and that is why it is not really bond friendly this morning.  Nevertheless, bonds are rallying.

The Employment Cost Index, or ECI, was the other major report this morning.  The ECI numbers came in inline with expectations at 0.7%.

Personal Income and Personal Spending were the other two reports released this morning and it appears traders focused on Personal Spending the most over all of the reports as it was the only truly bond friendly report.  Personal Spending came in below expectations, -0.3% versus -0.1%.  Personal Income managed to beat expectations slightly, coming in at 0.2% versus an expected 0.1%, but was down from last month.

What does it all mean for Florida Mortgage Rates?

Traders initially are in rally mode, but it is likely more of a retracement than a genuine move higher.  We have yet to see inflation coming back down, or moderating, as the Feds have been talking about, and with the Feds cutting rates further, we may even see an increase in inflation moving forward.  That does not bode well for mortgage backed securities, and thus, Florida Mortgage Rates.

For now, ride the wave and float for a while while it is advantageous.  Just be ready to lock again when the wave crashes.

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