In yesterday’s ‘rate update’ we shifted our outlook to a near-term float position citing technical trading patterns. This morning rates are modestly better as mortgage-backed bonds (MBS’s) have rebounded from oversold levels.
MBS’s are benefiting from fully staffed trading desks and a story from Market News International which is suggesting that the Fed may leave the door open to extend it’s $1.25 trillion commitment to buy MBS’s. This would likely keep mortgage rates low throughout 2010. If this story continues to develop we’d shift our outlook to a floating position.
Otherwise, we will shift our outlook back to locking since the long-term trend is for rates to move higher.
Current outlook: locking bias