Mortgage Market Commentary

Mortgage Market Commentary

Mortgage backed securities (MBS) prices are currently unchanged in quiet trading, FNMA 4.5% coupon 100.33bps. MBS were up as much as 15bps earlier, however. The U.S. economy shrank more than forecast in the fourth quarter, 6.2%, as consumer spending plunged, companies cut inventories and exports sank. Stocks fell on the news but have since recovered most of the losses. Chicago Purchasing Managers Index showed business activity contracted for a fifth consecutive month in February and Consumer Sentiment also fell weighed down by job losses, declining stock prices and plunging home values. The Fed continues to support lower rates with recent purchase of $25 billion MBS with $15 billion in agency 4.5% coupons.

The stock market and bond market's are both volitale today. They appear to be searching for direction after the Government/Citi deal and the revised GDP numbers released today.

WASHINGTON (AP) -- The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession.