Good Data turns Bad in a Heartbeat

Mortgage bond prices opened significantly lower this morning erasing the gains from yesterday afternoon and pushing rates higher. China's Premier expressed concerns about the US debt holdings they have. "We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

The bottom line is these remarks were not what we needed and are terribly timed. When the largest holder of US debt is publicly expressing worries there are major concerns about the performance of all US debt instruments including mortgage bonds.

The trade deficit came in at $36.03 billion, not as high as the expected $38 billion deficit. Consumer sentiment data will be released later this morning.

Today is going to be rough based on China's remarks. If you have loans out there that are floating, and the risk is yours, I would suggest locking.