Prices of Mortgage Backed Securities (MBSs) dropped a bit this morning as supply concerns weighed on fixed income securities. The FNMA 30-Year 4.5% coupon was down 4/32 as the Feds prepare to sell $78 billion in notes this week. MBS is currently down just 2/32 for the day. All in all, a fairly quiet day.
Fed policy makers are attempting to reduce long term borrowing costs while short term rates are effectively zero. Bond yields indicate that the central bank's efforts to restore trading in the credit markets are losing traction.
Existing home sales in December rose from a record low propelled by a large slump in housing prices as foreclosures surged. The inventory of unsold homes fell to 9.3 months from 11.2. That means if no more homes came on the market, it will take 9.3 months to sell all the homes that are currently on the market. The median price of an existing home decreased the most on record.
This week is full of economic reports which could impact the MBS market and hopefully bring us out of this tight downward trending trading range we've been in for the past week and a half.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB