Report after report this morning all with unfavorable news for MBS.  OK, so there's only two major scheduled reports today, but both of them have had a negative impact on rates this morning.  In addition, we have some headlines that are likely not helping.  Here's the run-down.

  1. Durable Goods Orders.  Although the overall reading was weak, down 0.3%, the number excluding the transportation sector rose 1.5%.  Stock futures reacted favorably to this while treasuries suffered.
  2. Jobless Claims fell by 33,000 last week, which was not only better than expectations, but also continues to bring the closely watched moving average lower.  This week's reading was 342k which brings the moving average to 369k.  Stock futures rallied on this news as well and bonds suffered.
  3. Ford Motors crushed analysts' profit consensus by turning a 100 million dollar profit.  A loss was forecast.  When a blue-chip shows this much strength despite the decidedly poor economy, it usually bolsters some hope or confidence in the broader market.  I don't think Ford earnings are going to have a major direct impact on MBS trading, but it's certainly a feather in the cap of MBS's enemy.
  4. The owner of Arby's has bought out Wendy's and plans to combine the two.  Well Wendy's, it's been nice knowing you.  How is this MBS-related?  It's not.  It's just very disturbing.

But not all of the news is bad for MBS (or Wendy's fans).  Many corporations continue to post weaker than expected earnings.  As the stock markets open for trading this morning, this is helping to keep the numbers in check, whereas a rally would be in order based on the previously discussed economic data.

Still, there has been quite a knee-jerk reaction in the fixed income market--something along the lines of "the sky is falling."  Well, the sky hasn't quite fallen, but if you didn't lock yesterday, it may as well have.  We're down half a point right now in the 5.5% coupons, a little more than that in 5.0's, and a little less than that in 6.0's.  

The good news is that investor's risk appetites for MBS are continuing to improve with each passing day where no Mortgage related headlines shock and upset them.  So the 10 year treasury is down more severely than MBS, but not by much.  You will likely be fine taking your lock cues today from treasuries.  As always, if there is a major swing, I'll keep you posted.

Yesterday's recommendation was to lock.  Today, I would not lock unless stocks show major strength and bonds rise even more in yield.  Hopefully what we'll see is a correction from the rather sharp reaction this morning as opposed to a stock market that gains momentum through the day.  Either way, you should be ready to lock at the drop of a hat.