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Posted To: MBS Commentary

Today's news was largely out yesterday: the Fed will probably reevaluate their exit strategy last spelled out in 2011--yes, the 2011 that was 3 years ago . Clearly, the state of the global economy was different in many ways then, so a reevaluation is scarcely a surprise. The key issue suddenly seems to be that of reinvesting the principal payments from the Fed's asset portfolio back into the markets from which those payments came. The 2011 verbiage said those reinvestments would be the first thing to go after asset pur
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chases were wound down. But yesterday, NY Fed President Dudley said that might not be such a good idea. Markets reacted to that yesterday afternoon, and were thus left with not much to react to when Today's Minutes said the Fed did indeed discuss this "stuff."...(read more)

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Forecasters predict an improving economy. What will happen to interest rates?
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Posted To: MBS Commentary

Today was a good day for both MBS and Treasuries. Not only that, but it was good right from the start (courtesy of a positive overnight session) and never got bad. It's not too common to see 10yr Treasuries rally for 2 straight days into an auction with no meaningful pull-back. The fact that this happened today, AND that the auction was still impressively strong is a generally positive statement about the current range. All that said, there hasn't been much for bond markets to sink their teeth into this week apart from following other markets and trading
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headlines. That changes tomorrow with the arrival of the week's first real economic data in the form of Retail Sales and jobless Claims. With 10yr yields very near their recent middle ground, a big beat or miss in the data could...(read more)

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60
A first-time homebuyer's inexperience can cause some costly mistakes.
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Posted To: Mortgage Rate Watch

Mortgage rates built on yesterday's strength and continued lower today. After lenders released rate sheet improvements in the afternoon, the average offering was right in line with the low rates seen on February 13th or 6th. While Monday's run up to 1-month highs briefly shifted the most prevalently quoted rates an eighth of a percentage point higher, the past 2 days of strength brings us back to a 4.375% Conforming 30yr fixed rate for the very best borrower scenarios ( best-execution ). Some instances of 4.5% may still be viable, but buying down to 4.25% b
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ecomes increasingly attractive if we hold here or move lower. So in 3 days, we've moved from the highest rates in a month to 2-week lows, and did so despite a much stronger-than-expected report on New Home Sales today. Strong economic data...(read more)

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31
Should you rush to get a mortgage, or take your time? Both, sorta. But don't panic.
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Posted To: MBS Commentary

Despite a solid day of volume and fairly noticeable mid-day bout of weakness, not much truly "happened" for bond markets today. There was plenty of reason to suspect that the Philly Fed data would come in weaker than expected (why forecasters didn't see those reasons is beyond us), but when it did just that, both stocks and bonds seemed to pause, look at each other, and ask "which way do we go?" The 6-month outlook component came in about as strong as the rest of the report was weak. That potentially helped confuse markets at least decide
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that they didn't need to embark on a flight-to-safety in the face of rotten economic data. With that decision made, the only other directional options were sideways and higher for stocks/bond yields. They did a bit of both by the...(read more)

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47
See rates from our survey of CDs, mortgages, home equity products, auto loans and credit cards.
51

Posted To: MBS Commentary

On a scale of 1-10, with 10 being the best case scenario for bond markets, today was 6 . It probably stood very little chance to be much more than a 7 or an 8, but a very real chance to be a 2-3. In other words, we dodged a bullet , but remain under fire. Retail Sales was quite a bit weaker than expected--notably affecting many firms' running estimates of GDP--and Jobless Claims offered no counterpoint, yet bond markets only managed modest improvements. Rates, for instance, didn't even make it back to Tuesday's levels. As far as consolation prizes go
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, it's better than a sharp stick in the eye, but in and of itself, isn't something we're likely to cherish for years to come. One counterpoint that makes things a bit less gloomy is the fact that the rally commenced despite...(read more)

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18
Should you rush to get a mortgage, or take your time? Both, sorta. But don't panic.
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