May 26th Mortgage Market Wrap-up

MBS prices are down -16/32 (FNMA 30-yr 4.0 at 98.91), below the initial price level at +2/32, and at the low for the day. Prices continue to drop in after hours movement and everyone is repricing!  MBS markets moved lower after May Confidence rose to the highest level in eight months. The index came in at 54.9, compared to the consensus forecast of 42.0. MBS markets regained a little ground following the 2-yr Treasury auction, but the gains didn't last long. Demand was very strong, and foreign investors purchased a huge 54% of the total, versus an average level of 31%. Investors will be watching to see if the results will be similar for the longer-term securities which will be auctioned tomorrow and Thursday. The Dow is rose 200 points. Tomorrow, Existing Home Sales will be released at 10:00 et, and there will be a 5-yr auction at 1:00 et