We remain in a LOCKING stance.  Mortgage Bonds = -16bp

Mortgage bonds traded flat yesterday in the absence of any major economic news.  Today shows a different picture.

As we informed you that the 200-day MA failed to maintain support and keep bond pricing above this critical level, price erosion was likely to occur and we are seeing just that. 

Initial Jobless Claims came out today lower than expectations, which shows a tightening labor market.  While you may think that is good news, it is actually bad news for bonds as the fear of increased wage-based inflationary pressures do not bode well for the bond market.

Fed Chairman Bernanke was speaking this morning on the subprime market and reiterated, though not in direct words, the continued need for homeowners to seek the guidance of qualified mortgage planners, a business model which is our core service using our unique MEDS^TM process.  With determination of "suitability" possibly becoming a legal requirement for mortgage professionals, many are afraid of what that means to their business.  Our process ensures suitability, so we will likely not be affected by any new laws.

This afternoon, the Philadelphia Fed Manufacturing Index is to be released (actually at noon), which could move the markets further.  With bonds testing another support layer, this could push bonds even lower starting a continued downward trend.

If you would like to follow daily guidance on bonds, head over to our Florida Mortgage Daily blog, where we strive to keep you up to date on the markets and provide guidance on locking rates on a daily basis, if not several times per day.