Mortgage Backed Securities are pretty much flat today, having traded in a solid sideways pattern for the past week. There was a good amount of positive news on the housing front, with pending sales improving and with home prices showing signs of leveling. This week will prove to be an important one, as mortgages bonds have been trading in a tight pattern, and they will need to break out of this range one way or another.
The ISM Services index came in this morning, showing that these sectors are contracting less than expected with a reading of 47 versus consensus estimates of 45.5. This also points to the potential for increased consumer spending, so it will be interesting to see how these numbers coincide with the rest of this week’s economic reports.
With mortgage backed securities trading in a tight range, we are continuing to float but very cautiously. Once the market turns, it will do so quite quickly. We will keep you posted of any changes.
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