Mortgage Backed Securities (MBS) prices have rebounded this morning after yesterday’s late afternoon sell-off.

Investors pricing this morning will be all over the place, with investors who need more loans being more aggressive in pricing and investors that are overloaded being overly conservative on pricing. The bond market is open a full day today and closes at 2pm eastern tomorrow and all day Christmas day.

We just got the release of the final 3^rd quarter gross domestic product and the number came in right where expected at -0.5%. No reaction from the bond market or stock market on the release.

New and Existing Home sales were both dismal but Consumer Sentiment rose & the GDP inflation gauge decelerated.

Treasury auctions $28 billion in 5yr notes today. Trading volume is thin (60% of normal) so large swings in price can be expected.

Yesterday was a rough day to be a MBS as sellers outnumbered buyers and drove the price down almost 1 full point. The only good thing to say about yesterdays trading was the volume was very light and this is to be expected Christmas week as a lot of traders are on vacation.

We have to discount, some, the big drop we had and don’t be surprised if we see a continued sell off today as investors go to cash.

If your loan is closing this month, hopefully you listened to our advice and locked earlier in the month. If you are closing next month, then you are still in the float boat.

Cheers,

Ian R Bennett

Mortgage Banker