Current Price of FNMA 5.5% Bond:  $97.66  -12bp   This is an improvement from today's lows of -19 bp

Current 30 year fixed rate at par - 6.125%

Mortgage Bonds are taking a beating after a stellar New Home Sales report was released.   New Home Sales were reported at 981,000, which was much stronger than expectations of 860,000.  And the national monthly inventory dropped to 6.5 months from March's 8.1 months.   It appears that the Housing market continues to improve from its worst levels. 

In other news releases, Initial Jobless Claims came in at 311,000, which was higher than expectations of 305,000.  Durable Goods Orders rose by 0.6% in April which was lower than expectations of 0.9%. 

Mortgage backed securities have now broken below support at $98.81 and are are trading at the lowest levels since last August. 

From a technical perspective, the next level of support is over .50bp lower then current levels. If the trends continue, look for rates to continue to worsen.

The US and China continue their discussions about trade. Again, if the US is successful in getting China to invest less in the US this could lead to further rate increases. One of their favorite investments is long term mortgage backed securities.

With the long weekend coming up, don't expect to see any improvement soon.

My advice? Lock your loans

UPDATE: The markets are rebounding. The current bond price is up3 bp, which is an improvement of 25 bp from the worst levels of the day. I'm actually seeing a few lenders give rate reprices for the better.

Technical signs point to the end of a down trend and a reversal. This has been prompted by a sell-off in stocks today. If this continues, $$ will be placed in Bonds and mortgage rates will improve. Tomorrows Existing Home Sales will be even more important now.

Advice? Float with caution