Wednesday, May 18, 2011

Mortgage Rates Likely Flat Today

Good morning and happy hump day to all the insighters.

There is not a whole lot of news breaking today just the minutes from the FOMC committee, which will provide insight into direction but most agree nothing unexpected will be heard from today's minutes.

Yesterday closed at a high point in the FNMA 4.0 coupon ending the day at 100.375.
The open today brought little change as the coupon was up +3bps but I think may be poised for a slight sell off then retracement in the afternoon. I say this as typically when you see levels near or at their peak and not a lot of driving market news you see the profit takers selling off and that usually forces the coupon down until the technicals and patterns of the 10Y (which are closely matched) either push them off further or bring them back in line. Since the 10Y is at 6 month lows on Yields (meaning lower interest rates) my belief is we will see a sell off of some magnitude maybe at or close to -25bps and should regain most or all of it this afternoon.
The 10Y is now below 3.11 for the first time since early December and currently sitting at 3.109. Two critical support levels for this are the 3.07 and 3.00 mark on the 200 day moving average. Based on us breaking through the 3.14 mark I believe we will get to the 3.00 soon.

Trading range - I expect today to trade between 100.15 - 100.45

Lock Advice

if closing 7-10 days - LOCK (we are at the top of the range so the sooner you lock the better)
if closing 14+ days - Lock/Float cautiously (we are at our high levels for today so no need to test but the longer term picture should bring us some improvement to rates)

Remember... YOU are the professional and your connections, knowledge and dedication sets you apart from others. If you need more connections go make them or use your current ones for introductions. If you need more knowledge read about your industry and events that shape it. If you aren't dedicated its time to take this seriously as the tide is shifting.

Make it a great day and do something to improve yourself!

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