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TGIF!! Mortgage Bonds / Interest Rates Closing the Week on a POSITIVE Note

By
Mortgage and Lending with FAMILY HOME LOANS

T.G.I.F! To All! 

Mortgage Bonds are rallying sharply higher this morning.  The reversal from the floor we had identified is continuing in full form, and adding even more favorable technical signals by way of a positive stochastic crossover.

Giving Mortgage Bonds some additional help, is the tame read on Core Consumer Inflation.  The Core Consumer Price Index (CPI) for May was reported today at 0.1%, which was lower than expectations of 0.2%.  Additionally, the year-over-year Core CPI dropped to 2.2%, which is the lowest read in more than a year, and is moving closer to the Fed's target zone for Core Inflation of 1 - 2%.  Since inflation erodes the buying power or value of the fixed return that a Bond provides, the news of inflation moving lower is very good news for the Bond market.   

And the tame inflation reading is even helping Stocks.  In recent days, Stocks had been selling off on the fear that interest rates were going to rise - which could hurt Stocks, as higher rates make it more expensive for businesses to "do business".  But after seeing this morning's tame Consumer Inflation read, Stock traders started buying with both fists, driving Stock prices higher this morning as well.   Maybe stock traders are seeing a peak in interest rates too.  Where's Bill Gross?   

Aside from the big headline news of the Consumer Price Index, there were a few other reports released, but their importance and impact paled in comparison to the welcome read on lower inflation.  Mortgage Bonds are showing signs of life.  But for the winning streak to continue for Bonds, it will have to claw through multiple layers of overhead resistance.  We will continue to float, be patient and see if prices can further stabilize and climb higher.  BUT REMEMBER--it takes a lot longer for rates to decrease where it only takes an minutes for rates to increase. 

Have a GREAT weekend!

~Santos

AZ Mortgage Broker: Michael George
Arizona Wholesale Mortgage Inc. - Phoenix, AZ
AZ Mortgage Rates
Thank God, Santos.  Let's hope it keeps trending in this direction.  I almost had a heart attack on Monday.
Jun 15, 2007 03:44 AM
Anonymous
Santos Sanchez
I hear you, Karen!!!  It has been a crazy, crazy downhill fall for a while.  We'll see what happens!!! 
Jun 15, 2007 03:52 AM
#2
Joe Adams
Major Mortgage USA/Branch Manager - Montrose, CO

Float and float, a little light at the end of the tunnel

 

thanks for the positive report

Jun 15, 2007 04:30 AM