Mark's Blog Report

Well, mortgage backed securities are fighting inflation.  This is probably due to yesterday's sell off, or perhaps there is support from weak economic data, but even in the face of dismal inflation data, MBS are holding steady on the day.

The economy was weakening by the hour with more companies releasing bad earnings, a weak consumer, and a weak housing market. 

Combine that with the sell-off yesterday and MBSs have a weapon with which to fight inflation today.  Unfortunately, the inflation news is not good for bonds in the long run, but it is encouraging to see them holding their ground despite such a forceful blow. 

Consumer Confidence Numbers were released today and they are at a five year low! 

Fed Vice Chairman Donald Kohn spoke today and had 3 important things to say that will impact mortgage rates:

1. Rate Cuts won't prevent near term economic weakness

2.  Return to growth will "take a while"

3. Most importantly, he does not expect recent inflation rates to persist and inflation will slow in coming years

All in all, this is great news for mortgage rates.  I expect the mortgage bond market to react quite favorably.  Also, officials from the FED commented that the economic slowdown is more of a concern than inflation.  Mortgage rates reacted favorably this afternoon.  More price improvements have come from lenders throughout the day and many lender's opening rate sheets could improve more if everything continues to trend in this direction.