Mortgage backed securities and treasuries opened in opposite directions this morning.   MBS opened a few ticks worse than yesterday, while the benchmark 10 year treasury note opened at 2.30, down from yesterday’s close of 2.32.  The early morning weakness with MBS resulted in lenders worsening rate sheets.
The only economic data released this morning was Import/Export prices which gives investors a gauge on inflationary or deflationary pressures.  Import prices fell a better than expected -.5% while export prices fell more than expected by -.2%.    Both reports came in close enough to expectations to not have any impact on this morning’s trading.
Both MBS and Treasuries traded throughout the day in a very tight range.  MBS underperformed treasuries trading within a 6 tick range while the benchmark 10 year note traded between a low of 2.29 to a high of 2.32.  No lenders were reported to have repriced.
The downward trend in rates continues to hold.   The most prevalently quoted conforming 30 year fixed rate continues to hold at 4.125% for the best qualified consumers.
The US stock and bond markets will be closed on Monday in honor of Columbus day.  Our next update will come on Tuesday.
Loan Officer Perspective
The early morning weakness with MBS resulted in lenders worsening rate sheets much more than what was warranted.  This is common especially when facing a 3 day weekend.  I am not a fan of locking on Fridays, but even less of a fan of locking on a Friday ahead of a 3 day weekend.  I feel lenders tend to be ultra conservative ahead of the long weekend.  My advice is to float til Tuesday. - Victor Burek, Open Mortgage
Mortgage bonds have had a great run in recent weeks are due for a breather.  Locking now ahead of a potential pull back makes a lot of sense.  The risk/vs the reward of floating at these levels is simply to high.  - Manny Gomes, Norcom Mortgage
Further dismay in world financial markets today as bonds gained and stocks sold off.  Surprisingly, government bonds were more in demand than MBS, they more often than not rise/fall together. Monday is Columbus Day, so rate desks won't be open.  Lenders typically price conservatively prior to 3 day weekends, so late day reprices may be an issue this afternoon.  What world drama will unfold between now and Tuesday?  Your guess is as good as mine, but if you're close to closing, I'd lock and relax, rather than float and fret. - Ted Rood, Senior Loan Officer