After last weeks full slate of economic data, this week brings us very little market movers. With a light week of data, mortgage backed securities will be driven by stock action and head lines. Last week we had a strong finish with mortgage back securities picking up a lot of buying action improving by over 1 basis point in discount. This equates to about .25% to .375% lower mortgage rates then earlier in the week.
It appears that we are heading towards lower rates. We have a slowing economy, lower inflation, spreads between treasuries and mbs remain at historic high levels, the rescue money still hasnt found its way into the system and rates tend to be lower in the winter which has proven to be accurate 8 out of the last 10 years.
This week brings us the release of 3 economic reports which might have some impact on mortgage rates.
- Leading Indicators, which measures the strength of the economy. Economists are expecting a -.3% reading after last months -.5% reading. This report will be released at 9 eastern time and will more then likely be over looked as most investors already have a good feel for the strength of the economy.
- Jobless claims will be the only report released. Economists are expecting 465,000 first time claims after last months 461,000 reading.
- Existing Home Sales, economists are expecting a 4.93 million after last months 4.91 million.
Mortgage backed securities have opened slightly higher this morning, so all looks good for floating. Remember, as mortgage backed securities go up in price, they go down in yield which equates to lower rates on mortgages.