Today we had the release of durable goods orders which came in stronger then expected. Usually, when we get stronger then expected economic news, it is bad for mortgage backed securities. Not this morning, but then again, not much is acting in the normal way.

The big news item of the day will be the fed annoucement at 2:15 eastern time. The futures market is predicting a .50% cut to the fed funds rate. Some analyst think it might be cut as little as a .25% up to as much as .75%. The more important item from the annoucement is the statement that the fed makes, not what they cut. As posted earlier in the week, when the fed cuts or increases the fed fund rate, it does not, i repeat, does not have a direct correlation to mortgage rates. So, if we get a .50% cut, don't think mortgage rates drop by .50%.

We will post back after the annoucement.

Over the last 5 days, mortgage backed securities have sold off over 200 basis points which equates to about .50% higher rates on mortgages. We are due for a rally, but will that rally be today? Hard to say, but like everything else, when the price of something keeps dropping eventually someone steps in to buy. Stay tuned and we will keep you posted on the days events.