Mortgage backed securities (MBS) prices are lower (rates higher) as stronger than expected inflation data has hurt the MBS market. FNMA 4.5% coupon 100.83bps, -22bps and near the low of the session. Jobless claims were unchanged at 627k, the 4 week moving avg rose to 619k and total benefit rolls jumped to 4.99 million, signaling the job market is deteriorating. Producer prices rose last month as fuel costs climbed but the long term threat to inflation remains the enormous stimulus packages and the unprecedented amount of government borrowing needed to support its spending. More supply leads to higher yields which raises mortgage rates; NOT GOOD.
* Please note that if you have a mortgage interest rate and monthly payment you are comfortable with you may want to consider locking that rate. It is very difficult to predict the market in these very volatile times. Most lenders have a rate renegotiation policy. Contact me for details.
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