Florida Mortgage Rates – Morning Report

by Florida's #1 Mortgage Planner on November 20, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  0bp

Mortgage bonds are off their lows already as this week’s Initial Jobless Claims data gets released.  There was no real surprise as claims came in at 542K, beating expectations yet again.  Good news for mortgage bonds usually, but will they rally on this news?

Probably not, based on how they have been reacting to news and data lately.  In other news, the Swiss National Bank made a surprise rate cut in their equivalent of our Fed Funds Rate, bringing their 3-month Libor target down to just 1.5%.  More trouble for foreign stock markets and our own stock futures point to a lower open.  Again, based on the news and data of the day, mortgage backed securities should rally.

We have two more sets of economic data slated for 10am, the Leading Economic Indicators (LEI) and the Philadelphia Fed Index, the latter typically being a major player in the markets.  Chances are that both will remain indicative of a struggling economy and they should bode well for mortgage bonds also.

So, why I am still holding a locking stance?  Mortgage backed securities are not trading as they should as the money flows over into Treasuries, which are currently seen as the safest place for traders right now.  Treasuries have been in rally mode recently and mortgage bonds have been flat, despite all of the data that would normally get them rallying as well.  We may see a mini rally today, but I remain skeptical about the future of mortgage rates.  If you want to float for a day or two, it may still prove beneficial, but be careful it doesn’t bite you in the butt.

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