Posted December 6, 2013Tweet
MBS went on a wild ride this morning following the release of a stronger than expected Employment report. From a high of +8/32 prior to the data, MBS dropped to a low of -12/32, but then recovered and turned positive. With all the recent selling, investors anticipated improving labor market conditions, and today's news apparently was not strong enough to justify further declines in MBS prices. Against a consensus forecast of 180K, the economy added 203K jobs in November. The economy has added an average of 193K jobs over the past three months. The Unemployment Rate declined from 7.3% to 7.0%, well below the consensus of 7.2%, and the lowest level since November 2008. Average Hourly Earnings, a proxy for wage growth, matched expectations with a small increase.
Core PCE inflation, the Fed's preferred inflation indicator, matched the consensus for an increase of 0.1%, and it was just 1.1% higher than one year ago. Personal Income rose less than expected. Consumer Sentiment jumped to 82.5, well above the consensus of 75.5, and the highest level since July.
This chart of the current Fannie Mae coupon shows the price of mortgage-backed securities (MBS) from the weekly market open until the time of this post. The vertical-axis reflects MBS prices as measured in basis points. In general, 100 basis points correlates to a 0.25 percentage point change to mortgage rate.
When MBS prices rise, mortgage rates fall. When MBS prices fall, mortgage rates rise.
Today's mortgage rates are based on the chart above. Click to get today's live mortgage rates.
Mortgage-backed securities are the basis for most U.S. mortgage rates including conventional loans via Fannie Mae and Freddie Mac; and FHA, VA and USDA loans as determined by Ginnie Mae mortgage bond pricing.
MBS pricing provided by MBSQuoteline, a real-time mortgage market subscription service.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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