Builders are jumping on the recovery bandwagon, as January Housing Starts beat consensus estimates, heading UP 2.8% to an annual rate of 591,000 units. Single-family starts are now 35.6% up from their low a year ago. Total new building permits dropped a tad in January, but single-family permits were up 0.4% for the month and UP 48.2% from a year ago.
The spike in Austin mortgage rates and worsening prices will be worked into the system until we find a new MBS buyer/buyers to replace Uncle Sam. That part of this Quantitative Easing process will end soon (end of March). That said, the street is being overwhelmed with mortgage paper by originators, servicers, and portfolio types that make this their business.
Lots of first tier data this week with housing data, PPI, and CPI (inflation data) taking the top billing. Best to stay a little defensive and keep an eye on the “Headlines."
All of the above are making mortgage pricing swing like a monkey in a tree. In the short run, it’s anyone’s guess where pricing will go.
My point here is that the market is a cougar and we are her cubs. Don’t get eaten. If you want to follow the trade, watch stocks as bonds are trading in an inverse relationship.
A price change for the worse (back to this morning’s levels) is in play. Wicked and volatile are the markets these days.
Comments were made about Treasury/MBS purchase program that are set to expire March 31st or June 30th are still in vogue. Markets are slipping as we speak, warranting a worsening reprice. Hang in there.
On the bright side, daily oscillators are still posting positive readings and holding above midrange levels. All good things for those that want lower mortgages/better pricing.
Bill Gross, Pimco’s bond god, said the decisions were based on their view of the dollar’s direction (negative) and increased government debt. All of the above has been good for mortgage pricing and bad for your 401K.
Bonds, notes, and mortgage backed securities are doing quite well given the plus 100 point gain on the big board. 10 year notes off 7/32’s (yield 3.70%) and MBS off 3/32’s tell the tale of the tape. Technically, a series of higher highs and higher lows are developing on the chart. This is typical of bullish price action and will help to limit the downside (selling).
