Mortgage Rates and Market News 5/25/11

"Good Morning and here is the rate outlook for 5/25/11 abd what is driving the market today...

The bonds closed on a high point yesterday ending the day at +28bps and closing at 100.281 (FNMA 4.0)

Today opened with a small gap down of -9bps as the slightly worse than expected Durable Orders numbers were released and caution awaited the FHFA numbers and 5yr auction for later today. (this should have given us a slight improvement but with an approaching holiday and 5yr auction results not in traders are hedging)

These are the numbers from todays news with only item left of significance to be the 5yr auction.

MBA Mortgage Index: Actual 1.1%, prior +7.8%

Durable Orders: Actual -3.6%, prior 4.1% (Consensus was -2.0%)

Durable Orders ex-Transportation: Actual -1.5%, prior 2.3% (Consensus was .6%)

FHFA Housing Price Index: Actual -0.3%, prior -1.6%

After seeing these numbers I have to believe we should trend in an upward pattern (lower rates) but the main focus will be on the 5yr auction this afternoon. If it goes as expected or better we could hit levels not seen since end of November and would make that best of all of 2011, if not then we could see a sell off between 15-25bps.

I expect today's trading range to stay between the 100.15 - 100.50 levels.

The 10Y also followed suit and is at its 2011 lows yielding 3.09

Lock advice

If closing in 7-10 days - Lock

If closing in 14+ - Float cautiously