Wednesday 1/21…Slow Day For Data

Today we do not get the release of any economic data.  Mortgage backed securities will take their direction from movement in the stock market and treasury market.  Currently mbs are down a few ticks from yesterdays close but nothing to panic about.  There is still a huge disconnect between the price of mbs and the rates offered by lenders.  Even if we just hold these levels, eventually the lenders will start to pass along lower rates.

Tomorrow we do get the release of housing starts and jobless claims.  Economists are expecting 550,000 first time claims for unemployment and I suspect the number will come in close to that.  Things are still looking very weak on the labor front which is a positive from mbs.  Since more people are out of work, employers are not pressured to pay people more money.  This keeps wage based inflation in check and as I have stated many times, inflation is the mortal enemy to mortgage rates.  At the present time inflation is not a concern.  With the new administration coming to power and a robust spending package, inflation will be a concern but we are many many months away from that.  A good barometer to watch is the price of oil.  Oil is a driving force for inflation as everything you do or buy has the price of oil worked into it.  Currently, oil is trading at $41 per barrel which is a long way off the highs of last summer of $147.

If anything big happens today I will get back to you.