Florida Mortgage Rates – Weekly Report

by Florida's #1 Mortgage Planner on February 22, 2010

What Happened Last Week?

Quite simply, as the data flowed it was unfavorable for the most part.  We saw continued data pointing to a slow recovery in the economy as the Empire State Manufacturing Index, the Philadelphia Fed Survey, and more, all point towards improvements.  And even inflation was in the the mix as the data flowed and last week’s inflationary data was mixed, with inflation climbing at the producer level and holding tame mostly at the consumer level.  However, jobs remain weak as Jobless Claims were higher than expected, bringing back that favorite word, stagflation.  As you likely know at this point, inflation is the arch enemy of mortgage rates and while the CPI was fairly tame, the PPI’s rise raises questions about inflation down the road as producers attempt to pass the costs.  And with data pointing towards “kinks” in the supply chain, they have a better than normal chance of doing so.

What Lies Ahead for This Week?

With the data taking aim at MBS prices, we find ourselves in about the exact same spot as last week.  That is, we are likely at the beginning of the next corrective move, or retracement, which I will get into more in the technical analysis.  As for data, there is only Treasury Auctions today, but data will be heavy as the week unfolds.  We will see Consumer Confidence and Sentiment, along with more solid data on the housing market which has been in question as well lately.  Numerous Treasury Auctions will occur this week and the added supply may hurt MBS prices and mortgage rates, especially if the auctions’ results are not solid.  There will also be numerous speeches this week from various Feds, including Big Ben Bernanke talking to Congress again for two days.  The week will end with a big read on the economy, the Chicago PMI, among other things.

What do the Charts Say?

As I mentioned earlier, we find ourselves in a fairly similar situation as last week began.  We have seen a significant drop in MBS prices and that places in the need for a corrective move higher.  We saw MBS prices bounce off support after breaking below their 200-day moving average, one sign showing the correction started and today’s slight move higher seems to point to its existence as well.  Stochastic indications have moved into the oversold spectrum, adding more proof that the move is needed and as they run flat, maybe even bringing the crossover today or tomorrow, we see more proof the corrective move is beginning.  But do not read too much into this move and try to think it is more than a corrective move as there is no proof.  Instead we see more negatives, namely the 10-day MA is crossing below the 50-day after crossing the 25-day MA last week.  The 25-day and 100-day MAs have turned lower and the 50-day is targeting the 200-day MA at this point as well.  All-in-all, the charts are very negative about the future other than the need for a corrective move.

The Bottom Line…

As with last week, mortgage rates will likely edge lower slightly before beginning their next leg higher.

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