Mortgage Backed Security (MBS) prices opened up this morning, but have since pulled back. They are now trading at the lows of the session. The 30-Year FNMA 4.5% coupon is now down 6/32 after being up 4/32 in early trading.
There are no economic reports scheduled for release today. However, stocks are trading lower amid dismal corporate earnings reports as well as over concerns the recession will hurt corporate profits. Fixed income assets (Treasuries and MBS) are dropping on speculation the new administration will sell a record amount of debt to battle the global downturn. Massive government spending will be needed to replace private consumption that was wiped out by the financial crises.
Watch for a Friday afternoon sell-off in MBS! If that happens, mortgage rates will most likely be higher this afternoon. If you need to lock in a rate for a closing early next week, it's best to do so now.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB