Mortgage Market Commentary

Mortgage Market Commentary

Mortgage backed securities (MBS) prices are higher (rates lower) on weakness in the stock market and speculation central banks may increase asset purchases after the Bank of England said it would buy long term bonds after cutting rates 50bps. Stronger demand for MBS leads to lower rates. FNMA 4.5% coupon 100.83bps, +20bps. U.S. jobless claims decreased to 639k from a 26 year high the prior week. U.S. worker productivity in the 4th quarter fell for the first time in a year as output dropped even faster than companies cut jobs and hours. Unit labor costs climbed 5.7%, indicating companies will keep cutting jobs to contain escalating losses. The faltering labor market has caused consumer sentiment to plummet and crippled spending. The Treasury will announce the amount of 3yr, 10yr & 30yr notes it will sell next week later today and the Fed details its most recent MBS purchases too; SUPPLY & DEMAND!