Tuesday 2/24…Light Day of Data

Yesterday mortgage backed securities managed to close up a few points leading to a few lenders repricing for the better.  So far this morning, mbs are basically even with close yesterday and early reports show lenders rates the same today as yesterday.   We should see par 30 yr fixed conventional mortgages anywhere from 4.75% to 5% depending on the lender.

We only get the release of one economic report today, consumer confidence.  Economists were expecting a 36.0 reading after last months 37.7.  The actual number came in at 25.0 a new record low.  It appears the euphoria regarding the new President has worn off and the consumer is very concerned about the economy and the seemingly lack of any plan to correct course.   We do have other significant events taking place today.  First, Fed Chairman Bernanke testifies today on Capital Hill and as always investors will listen to every word he has to say.  Next, at 1pm eastern there will be a treasury auction of 2yr notes.  The added supply of debt on the market could apply pressure on mbs to move lower(as mbs move lower, mortgage rates move higher).   The last few auctions were fairly successful, and hopefully this one will go over as well with high demand especially from foreign investors.  Next, we got the release of the Case Shiller home price index which tracks monthly changes in the value of residential real estate in 20 cities.  Year over year, this report shows that home prices have dropped by -18.5%, the fastest drop on record, with the steepest declines on the west coast and Phoenix leading the way with a 34% year over year decline.  Lastly, President Obama will address the nation and Congress tonight.  Hopefully he will stay off of the doom and gloom that he has been talking about and give a more optimistic speech.  Even President Clinton has expressed concern in the way President Obama has been speaking, we need to look forward and not back.

 I suspect today will be light trading as investors await to hear what President Obama has to say tonight.  Hopefully he will lay out a clear and specific plan to help our economy recover.  As I have been typing this update, mbs have held steady even though treasuries are rallying.  If we start to get a sizable movement one way or the other I will get back to you.