Yesterday, mortgage backed securities had a small rally and managed to close positive on the day. Most lenders repriced for the better yesterday as a result. So far this morning, we've given back a little of what we gained yesterday, and I suspect that lenders rate sheets will look very similar to what we had yesterday with maybe a .25 improvement in discount. This will continue to make par 30 year fixed rates anywhere from 4.625% to 5.25% depending on the lender.
The only economic report released today is pending home sales. Historically speaking this report does not have a major impact on the markets. I do hope this report comes in positive as we could use some positive news in regards to housing. The index is estimated to show no change at 0.0%. Last month it showed a decline of -4.0%. This report is a leading indicator of housing activity but it only shows an increase/decrease in signed contracts. A signed contract does not count as a sale until the loan closes. The actual number was just released and it came in much higher the expected at a 6.3% increase. Generally speaking higher home sales is a positive for the economy which is a negative for the mbs market, but so far we are holding at the same levels we were at before the report was released.
From early reports from fellow professionals, lenders rate sheets are slightly better this morning. With no more data to be released today, I suspect sideways trading is the way we will go. We do have a 4 week Treasury bill auction at 1 eastern. If the demand is weak, it could have a negative effect on mortgage backed securities. I will get back to you if conditions warrant.