Well some good numbers for the overall housing market. Existing home sales came in at 5.36 million units. Above the expected 5.23 million that was expected. Unfortunately NAR has come under fire by Core Logic for overstating the numbers over the last 3 years. NAR is going re-evaluate. So hopefully the accusations are not true or the numbers have not been overstated by much. Tomorrow new home sale numbers come out, we'll see how that number looks.
Mortgage Backed Securities have seen some modest positive gains over the last several days. Part of this is because of the continued unrest in the Middle East. Remember investors see some sort of volatility they will take their money and put it into a safe haven such as Mortgage Backed Securities. (Mortgage Bonds)These investors are not just from the US but from around the world. Two things working against Mortgage Bonds are 1) Inflation. Investors fear inflation and will adjust their money accordingly. 2) A 35 Billion dollar, 5 yr treasury auction this afternoon. Yesterday's 2 yr note had a poor showing so there is some pessimism going into the longer term 5 yr auction. How this sale goes today could have a negative impact on rates.
Remember, generally speaking when the stock market is doing well, mortgage bonds will do poorly and that could lead to higher interest rates. Conversely, if investors fear some volatility in the stocks the will shift money to the safe haven of mortgage bonds lowering interest rates.
The market is constantly shifting and many don't know that the government does not set mortgage interest rates. They can enact policies that could have a negative impact on mortgage bonds. For instance the portion of the Frank-Dodd Act that is set to go into affect on April 1st could adversely impact interest rates thereby slowing down the housing market. "Unintended Consequences."
Take care and make it a great day!
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