Mortgage
backed securities (FNMA 3.50 MBS) gained +35 basis points (BPS) from last
Friday's close which caused fixed mortgage rates to improve slightly.
It was a week of very slow gains as our domestic data weighed on pricing but
international events provided terrific support and even some upper
momentum.
Domestically, we had a very light economic calendar and no major Treasury
auctions. Existing Home Sales were much stronger than expected and
reached an eight year high. Weekly Jobless Claims fell to their lowest
level since 1973. And the Leading Economic Indicators
were three times stronger than market expectations. This wave
of positive economic news provided pressure on pricing but this was more
than offset by international events.
International Flavor: While the Chinese stock market continues to be a
huge concern, we also go news that their PMI (manufacturing
data) just hit a 15 month low. Greece remained front and
center as two more votes were passed and they used their
new bridge loan to make some payments back to the ECB and IMF.
"hair cut" creditors would have to take on Greek debt has the market
worried that Germany will scuttle the deal and it is this fear that caused the
upward movement in pricing for the week.
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