Mortgage Backed Securities are at their worst level of the day, putting lenders in a position to re-price for the worse. The Federal Reserve just released their Beige Book, which is a snapshot of economic conditions. In the report, the Fed indicated that though we are not out of the woods quite yet, the economic slide we have been on since last fall is finally moderating. This has pressured mortgage bonds lower, and we are now trading just below the current floor of support.
Adding to the misery was the auction of 10-Year treasury notes, which is currently yielding close to 4%. This is also pulling money away from the MBS market, and that trend can be expected to continue. Tomorrow there is another action, this time for 30-Year Treasuries. This will be in direct competition with mortgage backed securities, so it too could weigh heavily on the mortgage bond market.
If you still have your morning rate sheets, lock as soon as possible. Lenders will surely be sending out new rate sheets for the worse. This ride we are on does not seem to be settling soon.
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