Mortgage Market Update for this week

MMG Update - Thursday, November 20, 2008 9:35am ET

Current Trend Direction: Sideways along 200-Day Moving Average for 13th consecutive session

Risks favor: Carefully Floating

Current Price of FNMA 6% Bond: $101.41, +16bp

Over the years, MMG has continued to help the mortgage community discover and understand the disconnect between the 10-year Note and Mortgage Bonds. In recent times that disconnect has been very clear to anyone in our world - but in the past 24 hours, the disconnect has been dramatic. Since yesterday the 10-year Note has risen by 285bp, while Mortgage Bonds have risen 12bp!!! Do you think the media knows this? NO. Use this to inform your relationship partners and clients of what really drives fixed rate mortgages.

So what happened? Yesterday the Fed Minutes from the October Fed Meeting were released. The Minutes expressed concern over the health of the economy and their future targets for employment and growth were lowered. But the big news was the "D" word. The Fed, after years of being concerned with inflation, now say they are concerned about deflation. This news shocked the financial markets, pushing Stocks sharply lower while directing enormous money flow into ultra-safe Treasury Notes.

(the story continues tomorrow...)

MMG Update - Tuesday, October 2, 2007 10:36am ET
Current Trend Direction: Sideways
Risks favor: Floating
Current Price of FNMA 6.0% Bond: $100.16, -6bp
Yesterday, Mortgage Bonds bounced off of support at the 200-day Moving Average and while prices did finish the day higher, the advance was stopped at the 25-day MA resistance level. This morning, Mortgage Bonds are trading slightly lower and are now directly between these moving averages.
Stocks are trying to find some direction today after the Dow closed at an all-time high yesterday and above the 14,000 level. Should Stocks continue to move higher, it may be at the expense of Bonds, but it is not likely Bond prices will fall below the 200-day Moving Average in advance of Friday's important Jobs Report.
Housing news - the Pending Home Sales Index for August reported a -6.5% drop in sales, which was lower than expectations of a -2.0% drop in sales, but not nearly as bad as July’s dismal showing of a -10.7%. The Pending Home Sales Index is reported by the National Association of Realtors as a leading indicator of existing home sales. Mortgage Bonds ticked slightly higher on the weak news.
Dallas Federal Reserve President Richard “Loose Lips” Fisher is scheduled to speak in Dallas , Texas at 1:35pm ET. A Q&A session is expected to follow the speech so bond traders will be listening closely as Mr. Fisher has been known to rifle off remarks that could impact the market.
Mortgage Bonds continue to trade above the 200-day Moving Average and we will continue to float as long as prices remain above this floor.