Rate Update September 2, 2009

Mortgage rates are unchanged from yesterday.

Mortgage-backed bond (MBS) prices successfully closed above an important technical trading level yesterday.  This is good news for mortgage rates at least in the short-term.

MBS prices have benefited from a weak stock market (click here to understand why).  The Dow Jones Industrial Average is off by almost 250 points since Monday.  Historically September is the worst performing month for the stock market and so far it doesn’t look like 2009 will be an exception.

There were a couple more economic reports out this morning which were bond-friendly.  Traders’ attention is now firmly focused on Fridays employment report (click here to understand why this report is so important).  We will report back tomorrow with our pre-report strategy.

Current outlook: neutral