Mortgage Backed Securities are up to their best levels of the day currently, after suffering through a week’s worth of declines. This comes on the heals of yesterday’s losses in the stock market, which sent the DOW to its lowest level in nearly 12 years.
The Consumer Price Index (CPI) rose slightly last month by .3%, which left this at its worst level since 1955. The Core CPI came in at a tame .2%, leaving the year over year reading at 1.7%. This is well under the Feds comfort zone for inflation, and it indicates that inflation is so low it is bordering on deflation.
Mortgage Bonds have battled a very strong ceiling of resistence over the past week. With this morning;s gains, it might be prudent to lock your current loans to protect your pricing. Should Mortgage Backed Securities be able to break convincingly above the overhead resistance, we could see pricing get a little better. At this point, though, we feel the risk is much higher than the reward, as the next layer of support for bonds is a ways beneath current levels.
