Mortgage backed securities opened higher this morning after yesterday’s selloff.  They are still below their 25-day and 200-day moving averages, so it will be interesting to see if these levels turn into resistance today or not.

As for data, we have another big one coming up at 10:00, the Philadelphia Fed Survey.  If this report continues the trend of better than expected news surrounding the economy, MBS pricing will most likely falter and the resistance formed.  In the meantime, traders are still digesting the fact another Jobless Claims report came in better than expected.  This morning’s Jobless Claims numbers came in at 522K versus estimates of 535K and the 4-week moving average is down to 584.5K.  Continuing claims fell 642K to 6.273M.  Most of the data was due to seasonal adjustments.  There are some other minor bits of data due to be released such as the Housing Market Index due out at 1pm.

What does this mean for Florida Mortgage Rates?  Mortgage rates are slightly lower this morning compared to yesterday afternoon, however things can change after 10am, if not sooner.

Earlier today, I issued a midday report since mortgage backed securities were solidifying their next freefall by breaking below their 200-day moving average and seeking the next floor of support.  That fall in MBS pricing continued, with some rebounds, and mortgage bonds ended the day down 78 basis points, but the good news (if there is any) is that they were off their lows.

Stocks were up today, with the DJIA closing up over 256 points, and that typically draws money from the bond market, which was the case today.  Earnings reports were one of the main driving forces, though data pointed in the direction of a recovering manufacturing sector and possibly even the economy.

On the technical side of things, mortgage backed securities have broken their uptrend and even their sideways pattern they had tried to establish.  While a downtrend may not be fully in place yet, mortgage bonds may have a tough time regaining enough strength to get back above their coveted 200-day moving average, though only time will tell for sure.  With Jobless Claims and, more importantly, the Philadelphia Fed Survey tomorrow, sings of “life” will not be found if the data shown spreads more good news (or at least less bad) about the economy.

What does this mean for Florida Mortgage Rates?  Mortgage rates are on the rise and unless they find some strength, they will continue to do so.

Mortgage backed securities are now down to their lowest levels of the day, so I hope you locked already.  The important factor to notice here is that MBS pricing has broken through two layers of support, their 200-day and 25-day moving averages, the 200-day being the key.  Where mortgage rates will be moving from here will be dependent on whether or not they can manage to get back above this important level.  With the FOMC Minutes slated to be released in just over an hour, hopefully they can find that strength, but for now, better safe than sorry.

What does this mean for Florida Mortgage Rates?  Mortgage rates are on the rise today and maybe for the foreseeable future.

Mortgage backed securities fell a little further and closed yesterday down 38bp, well below their 50-day moving average.  This morning, they are continuing their move lower, possibly testing support at their 200-day moving average, and with their 25-day moving average coming up to meet that level, we could see a double support layer form in the next day or two.

There is a lot of data to digest today, and it will continue as the day progresses, so be ready for anything.  This morning started out with the weekly MBA Purchase Applications which showed purchase applications fell 9.4%, though refinance applications rose 18% as mortgage rates fell.  However, the big data play this morning was CPI and that came in as estimated overall, but the core level was slightly higher than expected, which will likely pressure MBS pricing.  The exact numbers were overall 0.7% (versus 0.7%) and 0.2% (versus 0.1%).  Adding to the problems was for mortgage bonds was the Empire State Manufacturing Index which beat expectations fairly dramatically, coming in at –0.55 versus expectations of –4.5.  Overall, the data this morning is not favorable for MBS pricing, and thus mortgage rates.

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely be moving higher today and lower mortgage rates in the future are no longer certain.

Mortgage backed securities had continued their rebound until recently.  As news hits the airwaves that the government is contemplating making mortgage payments on behalf of some tardy homeowners and even weighing in the thought of allowing failing borrowers to remain in the home as renters, the thought of moral hazard has been totally lost.  The government seems content at becoming the landlord of first resort ever since they have begun to take over the entire financial sector.  With the government wanting to take over failing homeowners’ payments and even become their landlords, government spending is out of control and traders are becoming afraid of what lies ahead.

What does this mean for Florida Mortgage Rates?  Mortgage rates are likely going to be back on the rise as inflation from government spending is back on the table. 

Mortgage backed securities managed to hold their own yesterday by closing above their 10-day moving average and that meant they remained above their 50-day moving average as well.  While they were showing weakness, so long as they held above these levels we could afford to wait until data started shooting holes in the floor.

This morning saw data play out with both the economy and inflation front and center and you can revert back to what I have been saying about inflation lately…it is coming, period.  The Producer Price Index (PPI) was released this morning and inflation at that level was considerably higher than estimates.  Overall PPI came in at 1.8% versus 0.8% and Core PPI came in at 0.5% versus 0.1% (up to 3.4% annual).  Traders initially sold off mortgage bonds on the news, but reality set in that producers can’t always pass these costs on to consumers and that much of the change was due to temporary factors. 

Retail Sales, the more important data play of the day, came in mixed.  The overall numbers came in at 0.6%, slightly above estimates of 0.5%.  However, excluding autos, Retail Sales came in at 0.3%, below estimates of 0.6%, indicating some weakness and that will play out favorable for MBS pricing, and mortgage rates.

With mortgage backed securities falling through the 50-day moving average, it may be better to go ahead and lock, especially if you cannot handle risk (then you should have been locking all along).  MBS opened down 22 basis points at the start on the heals of the data they fell another 31 basis points.  Now that the data has been digested, MBS pricing is on the rebound, the question is can they get back above their 50-day moving average and keep it from solidifying as resistance.

What does this mean for Florida Mortgage Rates?  Mortgage rates are higher this morning compared to yesterday, but they are on the rebound at the moment.  If they manage to improve a little more today, then lower mortgage rates are ahead.  If not, I will post again and inform you that locking is officially the best course of action again.

Mortgage backed securities ended the week holding their own within the gap between their 50-day and 100-day moving averages.  With no data plays today, just the standard short-term Treasury auctions, the likelihood of them breaking out of this range is not very high.  In fact, while MBS pricing is down today, they are off their lows already.

Tomorrow begins the influx of data that could change the way the market looks moving forward.  Tomorrow’s Retail Sales and Producer Price Index will likely stir the markets a bit, the question being in which direction.  Inflation has been favorable thus far, but the latest economic data has not, so Retail Sales could send MBS prices lower, which would not be good for mortgage rates.  Currently, the charts favor a drop to retest the 50-day moving average at a minimum, but the overall outlook remains favorable for mortgage rates.

What does this mean for Florida Mortgage Rates?  Mortgage rates should hold fairly steady today, though that will likely change tomorrow.

Mortgage backed securities fell yesterday, ending the day down 34 basis points.  The monthly bond rollover occurred yesterday and that made MBS Pricing look like it dropped 81 basis points since the monthly rollover was -47bp.  If you look at the charts, it looks worse than it really was yesterday.  Nevertheless, mortgage bonds are higher out of the starting gate this morning.

Data this morning included the International Trade report, and that is broken down into the Balance of Trade.  The Blance of Trade came in better than expected with a showing of $-26.0B versus expectations of $-28.8B.  The report consisted of a mixed bag of news, with good news being that exports increased and the bad news being that imports decreased.  In just over half an hour, we will see the big player of the day, Consumer Sentiment, and that could bring some changes to the direction mortgage rates are headed.

What does this mean for Florida Mortgage Rates?  Mortgage rates will likely hold their position today, maybe improve slightly.  The overall trend remains that mortgage rates will move lower, if not remain steady.

Mortgage backed securities had a wonderful day yesterday, moving 66 basis points higher overall, though off their highs slightly.  They were fueled by a better than expected 10-year T-Note auction, which had a bid/cover ratio of 3.28 and brought yields down to 3.365%.  With nothing negative really to stop them, MBS pricing easily rallied beyond their 50-day moving average, all the way up to and even slightly through their 100-day moving average.

As with any big move,  there needs to be a correction, and we are seeing one this morning.  The correction is fueled by the release of the Jobless Claims data for this week, which was considerably better than expected, coming in at –565K versus the –610K estimated.  We have a couple of minor reports to go, but the next test of the markets will most likely be this afternoon’s 30-year T-Bond Auction (1:00).

Getting back to the charts, we still see stochastic indications in the overbought spectrum, in fact maxing out right now, so a move lower is imminent.  However, with the break above the 50-day moving average, support is not much below their current levels (45bp) and may very well keep mortgage rates from moving significantly higher from here.  Also, mortgage bonds appear to be shrugging off the negativity surrounding the Jobless Claims data, so they may very well attempt to break the resistance of the 100-day moving average again today, likely dependent upon the outcome of the 30-year T-Bond auction.

What does this mean for Florida Mortgage Rates?  Mortgage rates may tick higher slightly this morning, but there is a chance they will recover as the day goes on.  The overall outlook is for lower mortgage rates.

Mortgage backed securities had a pretty good day yesterday despite the lack of data and the stochastic indications.  They ended the day up 19 basis points and even closed slightly above their 50-day moving average.  This morning, they are continuing their move higher, at least for now, though a snapback may occur as the day moves on.

Yesterday’s Treasury Auctions went well with the 4-week T-Bill auction having a strong bid/cover ratio of 3.60 and a yield of 0.160 and the 3-year T-Note having a good bid/cover ratio of 2.62 and the yield dropping to 1.519.  This morning’s MBA Purchase Applications numbers showed purchases jumped 6.7% and refinances jumped 15.2%.  Later today we will see Crude Inventories (10:30), Charles Evans speak (12:55) and the 10-year T-Note Auction (1:00), as well as see where stocks move.  There is a fairly good chance that MBS pricing could turn and head lower today and I may need to change my stance, so be ready.

What does this mean for Florida Mortgage Rates?  Mortgage rates have been edging lower and may hold steady today, though a move higher as the day progresses cannot be ruled out.