Wednesday, September 4, 2013

Market update - rates rise

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Bob Rosenbaum
The Rosenbaum Lending Group
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Wednesday, September 04, 2013

What happened yesterday?

Mortgage backed securities (MBS) lost -35 basis points from Friday's close which caused 30 year fixed rates to move upward.  In fact, yesterday's sell off completely erased all of the prior week's improvement.

MBS sold off immediately after the release of the ISM Manufacturing data.  The market was expecting a reading of 54.0 and it came in at 55.7.

A reading above 50 shows economic expansion (which is negative for your pricing) As a result, the benchmark FNMA 4.0 September coupon "tanked" to their worst levels of the day of -63BPS at 10:36EDT.

Construction Spending was also better than market expectations (0.6% vs 0.3%) which was also negative for your pricing.

But MBS climbed off of their bottom and started to regain some (but not all) of their early morning losses, rising from -63BPS to -39BPS on news that the Republican House Leader would support any action by President Obama against Syria.  This temporarily gave some momentum to the speculation that Obama will get the support he needs from Congress and then launch a strike against Syria.

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