MBS prices are faltering this morning (FNMA 4.50 -22/32) on talk of possible rate hikes and reigning in some of the FED's accommodative programs. There is also a hangover from the poor 30 year auction seen yesterday. As we discussed, the 30 year Treasury auction was poor by recent standards. The market may also have been a little overbought these past few weeks. Some of the trade today looks to be corrective. The Trade Balance (or imbalance as it were) came in lower than expected at -$30.78 Bil. vs. a -$32.9 Bil. estimate. This is unlikely to have influenced today's' downward movement. Stocks are up (Dow +33.93, S&P +1.78) again and the dollar is strengthening, adding some fuel to the sell-off. Basically, all of the talk and market data today is bond-negative.
Next week brings far more data than we saw this week, even though data will only be released Wed-Fri. Wednesday has Import/Export Prices, Retail Sales, Business Inventories, and FOMC Minutes on tap. Thursday, is Initial Claims (as usual), Consumer Price data, and the Philly Fed Index. On Friday, we have Capacity Utilization, Industrial Production, and UofM Preliminary Consumer Sentiment. Pretty much any of these has the potential to move rates. We will discuss in more detail as the announcements approach. Also keep an eye on corporate earnings announcements. The perceived health of the US business environment will have an impact rates. As always, positive results may push rates lower, while poor earnings may keep rates in check.
Have a great weekend!
Will Staney
Sr. Mortgage Banker
WJ Bradley Mortgage Capital
12444 Research Blvd. Ste. 103
Austin, TX 78759
(512) 377-1468 Office
(512) 644-1587 Cell
(866) 953-0155 Fax
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