Data for this morning, March 18, 2009

Mortgage bond prices are near unchanged mid-morning holding mortgage rates steady from pricing yesterday. Rates opened under pressure from stronger than expected inflation data only to recover when stocks opened lower.

In news released this morning consumer prices rose 0.4% in February while the core rate, which excludes the volatile food and energy costs rose 0.2%. Analysts’ estimates were for CPI to increase 0.3% and 0.1% respectively. Both the PPI and CPI data released for February were higher than expected.

Traders across the globe are concerned the massive amount of debt being issued by central banks here and abroad will ultimately lead to runaway inflation. The Federal Reserve ends their two-day meeting today with an announcement set for 2:15 pm ET.

The governing body is out of conventional policy ammo, however traders around the globe will be looking for signs of how they will continue to battle the financial crisis that is griping the world. One method widely discussed is the Fed purchase of long-term Treasury debt, similar to the MBS purchase plan currently in place. In terms of mortgage rates, thank goodness for the Fed. They are a major player in the purchase of MBS debt and have helped to keep mortgage rates low.

The Fed has purchased nearly 217B in MBS's since the program began, nearing the half way mark. With no more data set for release, traders will watch stocks while they wait for the outcome of the Fed meeting this afternoon. We expect the market to be thinly traded today adding to the volatility. Stay alert.