Wednesday 3/18…Anyone Have a Hangover?

Yesterday was another pretty boring day in the mortgage backed security market.  Treasuries and the stock market continued their roller coaster ride while mbs traded in a very narrow range.  So, mbs continue to be disconnected from the rest of the market.  We should see very similar rate sheets today that we have been seeing for about a week with par 30 year fixed rate mortgages anywhere from 4.75% to 5%.  Some lenders are offering incentives for very high credit scores and low loan to values which makes their par rate yesterday 4.625%.  Those incentives are for clients with over 800 credit scores and loan to values under 60%.  When you work with a good mortgage broker, they will know about these lenders and will be able to provide you a better rate on your mortgage.

This morning we did get the release of consumer inflation data in the form of the Consumer Price Index(CPI), which measures the change in price for goods and services at the consumer level.  The overall reading was expected to show a month over month rise of .3% and the core reading was expected to show a .2% increase.  The actual numbers came in slightly higher in the overall reading at .4% and the core came in right on expectations.  So, inflation continues to be a non issue today, but many worry that down the road we will have heightened inflation.  At 2:15pm est we get the release of the FOMC meeting announcement and it is expected that they will keep the fed fund rate unchanged at 0 to .25%.   The more important factor will be the statement they release where they will speak about economic conditions, give their outlook on inflation and give hints for what they plan to do.  As always, investors will scrutinize the statement for any hints on what the fed may or may not do in the future.  It has been speculated that the Fed may start to buy long term treasuries but the more experts I hear speak about the subject the less I believe this will happen, at least wont happen today with this announcement.  I will get back to you after the announcement with an update.

So far this morning, mbs are relatively unchanged from close yesterday.   Early reports from fellow mortgage professionals are showing rates to be very similar today to what we had yesterday.   Treasuries are continuing the roller coaster ride.  On Monday, the 10 yr treasury closed at 2.95, yesterday went down to a low yield of 2.91 than rose to a high yield of 3.01 and is currently trading today at 2.94.  Stock market futures are pointing to a lower open.