Posted by arscherer on February 11, 2008
With no economic news reports scheduled for release today, the bond markets are going to be reacting to actions in the stock market. Currently, stocks aren’t doing so hot, and the MBS is trading for 6 bps over what the ending figure was on Friday. With regard to the 10 Year Treasury; currently up 38 bps. This, of course, is good for mortgage pricing this morning, but you most likely won’t see a significant difference (if any) until this afternoon.
The reason that I say that is because the MBS is trading within the 50 and 25 day moving average, and isn’t likely to move much within the day today unless some unexpected news comes out of the woodwork and shakes the stock market.
So, with regard to locking or floating, I would still consider floating until this afternoon. If stocks begin to make a rally, lock for your clients that you are closing within 7 days. Just my opinion, but hopefully it helps! Let me know what your thoughts are.
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Posted by arscherer on February 8, 2008
Yesterday was an absolutely wild ride with regard to the MBS and 10 Year market. I believe we saw 2-3 reprices throughout the day for the worse. Today, the MBS and 10 Year are trying to regain the ground that they lost yesterday. That being said, the MBS is currently 22bps higher today while the 10 Year is 81bps higher today.
So, what exactly happened yesterday to make the bond market drop that significantly? If you look on CNN Money or Yahoo Finance yesterday, there was a news release about the comments from Dallas Fed President Richard Fisher. Let me start out by saying that the bond markets and inflation really do not get a long very well. When one is there, the other doesn’t want to be there. Fisher made comments that suggested higher inflationary concerns, and the bond market listened and left the room (rough analogy, but I think you get the picture).
For today, with no significant economic reports scheduled for release, I would float for now with hopes that the market attempts a readjustment from yesterday’s significant loss. The reason I say this is that the comments made by Fisher aren’t really backed up at this point, and the bond market made serious changes without substantial proof. So, float for now unless the market takes a turn in the afternoon.
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