Rate Update September 1, 2010

Mortgage rates are worse this morning.

Despite worse than expected employment and construction spending data stocks are trading sharply higher while bonds are trading lower, pushing yields up.

The renewed optimism in the stock market is stemming form positive news out of China and Australia.  Both countries reported stronger than expected economic activity.  Being that China is considered to be a driver of global economic health markets around the world are benefitting.

From a technical standpoint mortgage-backed bonds (MBS’s) still remain above strong support so we will continue to recommend a floating position.

Current outlook: long-term floating