Wednesday, March 26, 2014 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
More of the same this morning with Mortgage Backed Securities (MBS) continue to trade in a very tight range. The current pattern of ending the day where it started after seeing losses and gains through the day will likely continue, as there is no real economic data with any strength to break that cycle. Barring changes in overseas situations in Ukraine or China, MBS will likely continue this pattern again today and through the rest of the week. Today's Durable Goods Orders had almost no effect on MBS trading, and at 1pm the 5 year Treasury auction will be held. That auction may have a small effect on MBS.
It seems that I am reporting the same story now following the FOMC meeting last week. The story has not changed as the market for mortgage rates are "comfortable" in their current ranges. Even with the economic outlook expected to improve and about everyone expecting higher rates by the end of the year, interest rates are not feeling any pressure. I believe this is partly based on safety moves regarding the Russia situation. The US is pushing for strong sanctions while Europe is not so enthusiastic. The impact of increasing sanctions against Russia will harm Europe much more seriously than the US.
Technicals still reading neutral as pricing has been hovering very close to a tough layer of resistance, which also includes now the 200-day Moving Average. I will continue to recommend a floating stance - but with caution, as sentiment can quickly reverse in this fast moving market. If anything changes, I will post immediately on my twitter account - HomeMortgageLoans@CallTheMoneyMan.
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