Mortgage Market Commentary

Mortgage Market Commentary

Mortgage backed securities (MBS) prices are near unchanged this morning, after yesterday's half point (50bps) sell-off due to concerns over an unprecedented flood of new supply (more debt leads to higher rates). FNMA 4.5% coupon 100.35bps, -3bps. Mortgage rates are at the highest level of the month. Economic data released today was significantly worse than expected but MBS had little reaction. Durable Goods Orders fell 5.2%, Jobless Claims jumped to 667k with over 5 million people collecting benefits and New Home Sales declined more than 10% in January with a 13.3 month supply at current rate. Why are mortgage rates not falling with such bad economic news? Too much bad news leads to uncertainty. The Treasury Dept will auction 7yr notes today at 10am pt; MBS will focus on investor demand to gauge the markets appetite for ever increasing debt.