Tuesday 9/2 - Welcome Back

We hope you and your family had a wonderful Labor Day weekend, but now back to reality. After an exciting morning, rates are relatively unchanged from last week. Typically on days when the stock market is in full charge ahead, Mortgage Backed Securities and other fixed income vehicles pay the price.(Remember, when MBS are going down in price, they go up in yield causing rates to increase) It appears that the main catalyst for the gains in the stock market is the retreating oil prices. Oil is down almost $7 per barrel. And other commodities such as wheat, corn, sugar are also down being helped by a strong dollar. Most commodities are traded in dollars so as the dollar gets stronger it helps to bring down the price of all commodities. These are good signs of inflationary pressures moderating.

The only 2 relevant reports released today are construction spending and the ISM index. Construction spending was down a little more then expected but appears no one really cares. The ISM index, which is a survey of purchasing managers which shows the strength of the manufacturing sector of our economy, came in a little under what was expected which is helping out MBS. In fact, especially in the last few hours, we've seen a nice little rally in MBS, which, if it holds, will be very good news for rates later today and tomorrow. As always, if you are floating and want to stay tuned to intraday developments, check out the "professional version" of the blog linked at the top of the page. If you find the content too technical, take some time to read the primer also linked at the top of the page.