Rate Update May 27, 2009

Posted on by Evan in Rate Update

Fixed Mortgage Rates are up from yesterday.

Mortgage Backed Bonds are trading significantly lower this morning after falling below the floor of support in mid day trading yesterday.  Now that bonds have fallen below this recent floor, it is possible that the next support level will be found over 40 basis points away from current levels. 

Though yesterday’s Treasuries auction was received well, it was still not enough to keep bond prices above support as the stock market likely pulled some demand away as it enjoyed a great day.

Today there will be another auction (this time 5 year notes rather than 2 year notes like yesterday).  $35 Billion of these 5 year notes will be auctioned off today, and many analysts are paying close attention to the appetite of longer term debt.  This can be an indicator of how many people may think interest rates will act in the future because longer term debt carries more interest rate risk; If traders think rates will be higher in the future (as I do), the demand for these 5 year notes may not be too good.  This could cause the bond market to further slip in price

Current Outlook: Locking

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