Mortgage Interest Rate Market Guide

Jobless claims flat, key indicators seem deflationary.

slow so far...

Nothing much to report i.e. no inflation, no real deflation.. waters calm. Fed pulling out of MBS market March 31, stay tuned.

US Treasuries playing off of Euro uncertainty. Mortgage Backed Securities continue to be complimented. Baklava good, Greece fiscal policy bad (for the EU).

 

The 3.625% coupon bearing 10 year TSY note is currently +0-15 at 99-29 yielding 3.639%. 30 year mortgages following Tbills.

That 100-24 pivot point has been highly trafficked recently...

A healthy rally today in rates. Auctions support improved rates for the next day or so.

eld up well to potential correction.

 

You can see the steep drop in price for the Fannie Mae 4.5 which directly translated into the higher rates we've seen in the last few days. Fridays pricing chart:

After opening to the upside, mortgages are now trading flat thanks to inflationary concerns in PPI data (if you need an explanation).  The FN 4.0 is  +0-01 at 97-21 yielding 4.224% and the FN 4.5 is +0-00 at 100-21 yielding 4.43%. The secondary market current coupon is 4.41%.

Mortgages have retraced yesterday's gains as well. The FN 4.0 is -0-07 at 97-29 yielding 4.201% and the FN 4.5 is -0-05 at 100-29 yielding  4.401%. The secondary market current coupon is now 4.371%. The CC yield is +66.7bps over the 10 year TSY note and +57.4 over the 10 yr swap rate.  The FN 4.5 has found support at 101-00...the next inflection point is 100-24. A move that low would warrant reprices for the worse from lenders.

100-24 is our first level of support. Reprices for the worse are more likely if the FN 4.5 dips below 100-20.

Bearish Treasury traders, who have been quite patient with their strategies in 2010, are starting to see their positions pay off. I am not issuing a definitive lock alert at the moment because the market is thinly traded and highly sensitive to headline news, but I would be very defensive of any rate sheet rebate appreciations that are passed along by lenders in the near future. If you're still floating, you should be looking to GUTFLOP a greater percentage of your pipeline. If you are greater than 30 days out, compare the  45/30 day lock price spread against the cost of an extension.  

The dollar is slightly cheaper, commodities are more expensive and stocks are trading in the green.