Mortgage Market Commentary

Mortgage Market Commentary

This week the Economic Calendar has a light schedule as the the U.S. prepares to sell $63 billion in notes/bonds and investors speculate whether the central bank will buy government debt in an effort to reduce consumer borrowing costs. Last week mortgage backed securities (MBS) prices rose almost a full point (rates improved) as money flowed out of the stock market into fixed income assets; DOW lost nearly 700 points. No economic data will be released on Monday. Report on Wholesale Inventories is due Tuesday along with a Fed Chief Bernanke speech. Wednesday the Mortgage Bankers Weekly activity for purchase and refinance applications is released. Thursday's Retail Sales report will be the primary economic data for the week. Jobless Claims and Business Inventories completes the days information. Friday has Import Prices, Trade Balance and Consumer Sentiment for investors to digest before the weekend. Treasury auctions on Tuesday (3yr note), Wednesday (10yr note) and Thursday (30yr bond) can inluence MBS prices this week. Traders will focus not only on the yields but also the demand for the debt. A drop in demand can signal a increasing rate enviroment.

Morning Quote
FNMA-30 4.5% coupon 101.11 (DOWN 14 BPs from prior close) Pricing May Worsen!