Last week proved to be tough for mortgage backed securities. Many mortgage professionals and consumers alike cheered as rates opened Monday at 4.875%, the first time below 5% in over a month. However, that same crowd was booing as the week progressed as Friday saw rates open at 5.25%. It seems that investor sentiment has shifted yet again back to a quicker economic recovery scenario. Driving the change in sentiment were several companies from Bank of America to Google that reported better than expected earnings and a couple economic reports that came in better than expected. This shift is pulling money out of the safety of fixed income and into the riskier but potentially higher returning stock market. Throughout the upcoming week we still have some other key earnings reports with companies from Wells Fargo to Coca Cola yet to report. Strong earnings reports can have the potential to continue the current sentiment of a quick economic recovery which will make it difficult for MBS to post any gains which could result in lower mortgage rates. Overnight, stock markets around the globe posted strong gains which continue to apply pressure on fixed income. At the open this morning, MBS continued their recent trend of moving lower in price which moves rates higher, but have since stabilized near Friday’s last levels.
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