Rate Update November 17, 2008
Mortgage rates are slightly higher this morning.
Mortgage-backed bond (MBS) prices continue to hover around the all important 200-day moving average. History tells us that when MBS prices approach the 200-day moving average they have a tendency to “bounce” off this specific level (pushing rates higher or lower). However, today represents 9 straight days in which prices have traded near this technical level. This is quite an oddity.
From an economic standpoint the news continues to be ugly. Banking giant Citigroup announced today that it would eliminate another 50,000 jobs on top of the 23,000 that it has already cut this year. Furthermore, Goldman Sachs announced today that it’s executives have requested NOT to take bonuses this year. Last year Goldman Sachs’ CEO took home a poultry $70 million in bonus compensation.
As we know bad news for the economy is typically good news for mortgage rates. However, MBS prices are having trouble rallying above the 200-day moving average. Until this happens we will remain in a neutral stance with a locking bias.
Current outlook: neutral with locking bias