The Bridgewaters, Massachusetts

Mortgage Backed Securities (MBS) are trading lower this morning with the 30 Year FNMA 4.5% coupon down 4/32 and at the low of the session.

The producer wholesale prices fell last month as demand for raw materials dropped. Meanwhile, jobless claims rose last week. This indicated that companies have stepped up the pace of firings as weak holiday sales and lack of credit prompt even more payroll reductions.

Foreclosure filings also jumped as falling home prices, tighter lending and deepening recession battered property owners at the same time as the 30 year fixed mortgage interest rates fell below 5.0% for the first time on record. MSB has been moving sideways this past week, and is moving sideways again today with a downward pressure on prices. Remember, on MBS, as the price goes up, the yield goes down - and mortgage interest rates go down with it. Conversely, as the price goes down, the yield goes up - and so do mortgage interest rates.