Inflation was back in the news today. Fed member Frederic Mishkin appeared on CNBC this morning stating that inflation could come to the forefront given all of the government programs. The news is keeping Mortgage Bond prices near unchanged levels.

The Federal Reserve Bank of New York reported they purchased $19B in mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae between January 15 and January 21, bringing its total purchases so far up to $52.6B, or around just 10% of their $500B commitment through the end of June. The program was instituted to shore up the slumping housing market.

For today, I am currently recommending floating as support seems to be holding just below where Mortgage Bonds are trading. With the Fed still buying Mortgage Backed Securities there is a potential that home loan rates could improve in the near term."


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It's been another wild and volatile morning for Mortgage Bonds after a slew of disappointing economic news and negative corporate earnings reports initiated an early sell-off in the Stock market.

Initial Jobless Claims reached its highest level since November 1982. In addition, housing remains weak as Housing Starts fell more than 15% in December and Building Permits also came up short.

Mortgage Bonds are attempting to trade above support. I recommend floating for now, but I will let you know if today’s volatility requires a change of course."



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Mortgage Bonds are trading just above important support at the Rising Trendline, and with no economic reports scheduled for release today, pricing could be influenced by action in the Stock market. After a rough start in 2009, Stocks are hovering right near important support as well, and could bounce higher from here.

Adding a slightly positive tone to Stocks this morning is news that IBM beat earnings estimates for the 4th quarter. The tech bellwether said it also plans to earn $9.20 a share in 2009 versus expectations of $8.70.

After a few days of pricing pressure, Mortgage Bonds are trading near oversold conditions, which could make prices ripe for a reversal higher. Couple that with the strong underlying support from the Fed and it suggests for the time being to float."



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"This morning, the Consumer Price Index for 2008 was reported the lowest since 1954, indicating that inflation is not a problem. The big news of the day, however, is in the banking sector.

Citigroup reported a $8.29 Billion loss, completing its worst year ever since its inception in 1812. Bank of America also lost $1.79 Billion in the 4th quarter, making 2008 the bank's first yearly loss in 17 years. However, Bank of America received a lifeline late last night in government funds in exchange for preferred stock.

Currently, the Stock market is rebounding a bit higher, which is applying selling pressure on Bonds. However, prices have already improved since early lows. For now, I recommend floating, as we watch to see if prices can hold."


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"There has been a barrage of economic data and news released today, yet Bonds have remained relatively steady so far this morning. Meanwhile, JPMorgan Chase surprised the market with an earnings report that beat expectations. It's been awhile since a financial Stock actually surprised to the good side.

In other news, inflation is virtually non-existent at the wholesale level as the Producer Price Index showed that prices fell in December for the fifth consecutive month. Tomorrow’s Consumer Price Index report will show how costs have increased or declined on the consumer side, and I will be watching to see how the markets respond.

Overall, Bonds continue to move in a sideways pattern, thanks in part to the Fed buying support of Mortgage Backed Securities. For now, I recommend floating.



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"Mortgage Bonds improved and Stocks lost more ground today on the awful Retail Sales news. Sales plunged by 2.7%, far worse than expected. Even worse, when you strip out autos, the number declined 3.1% versus expectations of a 1.4% decline. Retail sales have now fallen for six months in a row.

In the banking sector, Deutsche Bank, which is Germany's largest bank, warned of a fourth-quarter loss of $6.3 Billion, and Chase announced they are pulling out of their broker wholesale lending. This has added to the selling pressure on Stocks.

The Fed's Beige Book will be released this afternoon at 2 pm and could influence the markets, so stay tuned. For right now, I recommend floating to see if prices can revisit resistance at the all-time price highs, about 40 basis points above present levels."



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"Stocks are trading near unchanged levels after being under selling pressure yesterday due to Alcoa's 4th quarter loss of $1 Billion and rumors that Citigroup has more credit losses mounting.

In other news, Federal Reserve Chairman Ben Bernanke discussed the financial crisis this morning, saying that the highest priority is to promote global financial stability. On a positive note, he said that the US Federal Reserve still has enough policy tools to combat the current recession.

For now, I recommend floating. But I will be watching carefully to see if Stocks rebound after losing 500 points in the last 5 days. If that happens, Bonds could drift a bit lower and a change of course may be needed. I will keep you posted."



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"Today kicks off the 4th quarter earnings season for the Stock market. No one expects any stellar reports to be in store, but many eyes and ears will be on what these companies say regarding future earnings.

In other news, Oil prices are tumbling this morning to near $38 a barrel on concerns that slumping demand will outweigh output cuts by OPEC. Due to the present economic slowdown, Oil consumption is expected to fall by 1 million barrels a day this year in the US alone.

Currently, Bond prices are down, but may rebound a bit later if the Fed steps in with some buying. Therefore, I recommend floating for now.


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"The Labor Department reported this morning that there were 524,000 jobs lost during the month of December, this was worse than expectations of 500,000. All told, there were 2,600,000 jobs lost in 2008 and was the biggest job loss in any calendar year since 1945, when 2,750,000 jobs were lost as the wartime economy was demobilized.

Adding further sting to the report was the Unemployment Rate, which shot up higher than expectations to 7.2%, the highest reading in 16 years.

I will continue to recommend Floating for now, but be mindful that Mortgage Bonds are trading at all-time historic highs - so a pullback lower would not be a surprise."


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"Mortgage Bonds are trading higher and at historic levels as the Fed was likely active in the markets continuing their purchase program this morning.

Meanwhile, Stocks are under selling pressure thanks to a rash of earnings warnings from the nation's retailers. Wal-Mart said today that 4th quarter profits will miss expectations after one of the worst holiday shopping seasons on record, while Macy's and Limited Brands cut their earnings forecast after the weak December sales readings. Macy's also said they are closing 11 stores.

In other news, the markets are bracing for a bad Jobs Report tomorrow and if the number is indeed bad, Mortgage Bonds could improve further as Stocks will likely come under selling pressure. Therefore, I recommend floating into tomorrow's report, but I will let you know if the news of the day requires a change of course."

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"The Fed was back in the markets this morning aggressively buying Mortgage Backed Securities pushing prices higher as it tries to lower home loan rates. The Fed will be buying $500B of Mortgage Bonds - that equals approximately $4B in buying power each trading day...that is pretty good buying support, which could help mortgage rates move steadily sideways to lower over the first two quarters of 2009.

At 2pm ET the Fed will release the Minutes from the December 16 Meeting which may shed some light on the Fed's view of the economy and the reasoning behind the aggressive cut. The Fed lowered the Fed Funds Rate by .75% to a range of 0 to .25% at that meeting.

With the Fed providing underlying buying support to Mortgage Bonds, I am recommending to float longer-term, but on short-term transactions we should be ready to lock at a moment's notice to protect pricing. We will likely see the lowest rates in our lifetime during the first two quarters of 2009, so get this message to everyone who can benefit and have them lock in during this once in a lifetime opportunity."

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"Happy New Year! Mortgage Bonds are off to a great start in 2009, as the Fed begins its planned purchase of Mortgage Backed Securities. This process will continue gradually through June and should help buoy Mortgage Bond prices. For today, there are no economic reports due out, so Mortgage Bonds will likely respond to today's Fed announcement.

In other news, President-Elect Obama's new stimulus package will reportedly be worth $775 Billion and will include hundreds of Billions of dollars worth of tax breaks and credits for individuals and businesses. This is good news for the economy and should help with consumer confidence over time
© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.