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Last week ended basically where it began with prices of mortgage backed securities moving sideways near record highs and mortgage rates holding steady near six month lows. MBS traded in a very narrowing range as the week progressed which allowed lenders to publish base 30 year conventional mortgage rates in the 4.625% to 4.875% range. While the week ahead is holiday shortened in observance of Thanksgiving, there is still plenty of data to take note of...housing data specifically. With MBS prices near record highs and mortgage rates near six months, I continue to advise clients and readers to lock. ...

Mortgage rates took another step higher yesterday following a 3% rally in the stock market. Tame inflation and “not as bad” industrial production numbers have resparked the green shoots theory of a quick economic recovery. Market participants, not wanting to miss out on the rally, quickly sold their fixed income investments to move their money into the higher risk but higher return equity markets. In total, mortgage backed securities moved lower in price (as price moves lower, rates move higher) by 75 basis points which forced all lenders to reprice for the worse with some issuing a couple reprices as the losses snowballed into close. Losing much more was MBS’s closest relative, the benchmark 10 year note, which sold off and moved to a higher yield of 3.63. Just a few days ago, the 10 year note was trading under 3.30 in yield. After mortgage rates briefly touched 4.875% the other day, they have quickly turned and by day’s end yesterday par was sitting at 5.25%...

After making little to no ground during the holiday shortened work week, mortgage backed securities are still in search of clear direction. Last week MBS closed at the same level at which they opened on Monday, even a very poor Employment Situation report was unable to increase demand for "rate sheet influential" MBS coupons. To remind readers, as MBS move higher in price, mortgage rates move lower. Following the release of the employment situation report on Thursday, MBS did manage to gain some ground but eventually gave back early morning gains as market participants made for an early exit ahead of the three day weekend. Matt and AQ inform me that MBS are battling a very unclear economic picture which is prohibiting prices from moving higher. The week ahead is very light on economic reports with the highest impacting events to come from Treasury auctions throughout the week...

Yesterday mortgage-backed securities had their least volatile day since last week's " Black Wednesday " event. MBS traded in a tight range most of the session, closing slightly higher than the previous day's "going out" marks. With all the volatility recently, I have to say it was nice to have a calm day, especially since we ended up in the green. Some of that volatility has returned to the market today but lender's rate sheets still look very similar to yesterdays...