Posted by: cfigueira | May 12, 2010

Mortgage bond prices

Mortgage bond prices opened lower Wednesday morning erasing the small gains seen Tuesday afternoon. Rates are under pressure from strong stock futures, an indication the DOW Jones index will open higher. In news released this morning, the US trade deficit stood at $40.5B. This data was near expectations and had little effect on trade. A trade deficit occurs when one country (the US) imports more than they export. Our dependence on foreign oil drives our deficit higher. With no more news set for release, traders are now waiting for stocks to begin trade at 9:30 am ET and for the results of the 10-year Treasury auction at 1:15 pm ET. When discussing floating/locking with borrowers, remind them today’s 10-year offering and tomorrow’s 30-year offering can cause some heartburn for traders and let them know rates will most likely become volatile as the auctions approach. The longer duration and large size of bonds makes them harder to sell than shorter-term bonds such as the 3-year yesterday.

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