US Stocks are in a seesaw trading day, and are basically flat right now.  Mortgage Bonds are not so lucky, having began lower, and then fallen further during the morning.  

Its another strange day on Wall Street as traders are acting almost entirely on results versus expectations, rather than profitability.  Citigroup reports losing money for the 3rd consecutive quarter, writing down $7.2 Billion in investments, and is cheered for not being as bad as predictions.  Microsoft, and Google both post strong year over year profits, and see their stock prices tumble for not achieving expected results.  Commodities are not providing much direction either, as Oil is up only slightly, while Gold is down considerably in today's trading.  Shares of Fannie, and Freddie are continuing their rally since Tuesday's government action that halted "naked" short selling, despite lingering questions about capitalization.  

Mortgage Bonds are searching for some floor of support, and are currently down roughly 50bp, bringing them to the lowest pricing levels of the year so far.  This low should act as a level of support, and the last time we fell to this point we bounced off into a strong recovery.  There are no economic reports for this Friday, so the negative tone for Bonds was set early while the Market was in a euphoria over less than expected losses by Citi.  

My recommendation is to float for today, and go with the age old saying of "never lock on a Friday".  The damage was done early on to mortgage rates, so if you didn't lock 1st thing, most investors have re-priced for the worse.  The Stock Market is definitely in a downward trend, and historically Bonds have reacted positively to the support levels we are currently at.   

Make it a great day!

Ron Brown

615 E Pioneer Ave.
Puyallup, WA 98372
(253) 520-0000