Mortgage Market Commentary 3.27.09

Mortgage backed securities (MBS) prices gain (rates fall) as stocks globally are lower (DOW down 100) and the Fed prepares to buy notes for a second time this week to hold down borrowing costs; FNMA 4.5% coupon 102.06bps, up 17bps and the high of the session. Personal Income slipped 0.2% in February while Consumer Spending slowed to a 0.2% rise. Firming oil prices did damage to overall inflation, the price gauge tied to spending patterns rose 1.0%. Today's report offers a picture of an economy that remains in recession, while the pace of contraction has eased the consumer is losing ground. Consumer Sentiment edged 0.3% higher to a still severely low level of 56.6 in March. Expectations did rise 2.5% to 53 indicating the pessimism isn't getting worse but the current conditions component fell 3% to 62.3 a reflection of ongoing contraction in the labor market. Rates should improve today as most lenders resisted passing through yesterday's late afternoon gains. As always on a Friday, be watchful of an afternoon sell-off; consider locking off morning pricing. TGIF!