In A Word:

We've lost another half point give or take.  Chalk it up to better than expected jobless claims.

To Lock or Float?

Normally the recommendation here leaves room for your own personal risk tolerance, but today is slightly more clearcut.  The curve has dropped enough that it's going to take data like tomorrow's employment numbers to move it lower.  It's also possible a large stock rally could do the same, but that at least, you can see coming from a mile away.  So we float intraday, but not necessarily through the day.  The decision to keep floating into tomorrow will be a more difficult one.

The Numbers:


6.0% FNMA OTR is down 12/32nds on the morning

5.5 FNMA OTR down by 18/32nds

The News:

  • Jobless claims
    • expected at 374k
    • Actual Reading was 357k
    • This marked the first sell off in MBS this morning at 830AM
  • Earnings
    • Numerous retailers are releasing earnings today, this is not a scheduled piece of data we normally care about, but it is important to note since these strong earnings may give a lift to stocks today.

On Tap For The Rest Of The Week:


    - EMPLOYMENT SITUATION.  This is a hugely important monthly report that tracks "non-farm" payrolls which is the most closely watched indicator of the labor market.  The lower the number, the better for rates.


Ouch!  Two days in a row!?  Since we've already been dealt this ugly deck of cards for the morning, the good news (for those that didn't lock yesterday), is that I don't think we are going to go much lower today.  So if stocks fail to capitalize on this better than expected data with a massive rally, look for improvements.  we're already up 2/32nds from the bottom of the curve.  Also, keep your eye on Lehman Brothers.  If they do well in the face of this speculation of their weakness, it can be bad for mortgage rates because it will give a lift to stocks.  This isn't purely because of Lehman's stock price, but rather because they are a touchstone of sorts for the rest of the financial stocks.  But float for now, stay tuned for an update, and good luck.