Happy New Year!!!! 

The mortgage backed security market is open today for a normal trading day.  So far this morning, mbs are up, recouping all of the loses from Wednesday.  We do get the release of one piece of economic date, the ISM index.  This report will be released in about an hour and usually has an impact on mbs pricing.  This report measures the strength of manufacturing and is a good indicator of future inflationary pressures.  One signal of a strong economy is a strong manufacturing sector, so a better then expected report is a negative for mbs and a weaker report is a positive.  Remember the general rule of thumb, good news for economy is bad news for mbs.  Economists are expecting a reading of 35.0 after last months dismal reading of 36.2.  So the expectations are awfully low. 

I suspect that trading will continue to be light as a lot of traders will still be on vacation.   

Float club is still in session, but you must evaluate your position now every day as we are into the new year.  There is no reason to lock this morning as mbs are improving in price, and I will get back to you if we start to see a sell off.  Always, at lock cut off, evaluate your loan or loans and if you have a rate that you are happy with consider locking.  I do believe lower rates are ahead and we still have the Fed buying of mbs’ to start.  All lenders today should be offering sub 5% mortgages and the lenders who are light on loans will price more aggressively and the lenders who are still back logged with loans will be more conservative. 

On a side note, I would like to gloat a little about a football game that took place last night.  The Virginia Tech Hokies won the Orange Bowl!!!!   Go Hokies!!!!!