Mortgage bond prices are lower mid-morning erasing some of the gains seen yesterday afternoon. Rates are under pressure from positive stocks and worries about the upcoming Treasury auction next week.
In news released this morning, unemployment in February stood at 8.1% and non-farm payrolls fell 651,000. Analysts were expecting unemployment to stand at 7.9% and for the economy to have lost 650,000 jobs. Also, there were downward revisions to previous months data. The jobs market looks awful.
With no more data set for release today, traders will watch stocks to help determine interest rate direction. Be very careful this afternoon.
Next week the Treasury is set to auction 3, 10 and 30-year bonds. The additional supply, especially on the long end of the yield curve may make it a difficult week for mortgage rates. Treasury debt competes with mortgage-backed securities for available funds. Globally governments are issuing record debt to raise cash for the bailouts. One concern among traders is the amount of debt may overwhelm available investment dollars causing rates to spike to attract buyers. The more debt that gets issued both here and abroad makes this more likely. The auctions occur next Tuesday, Wednesday and Thursday.
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Thank you for your remarks. I will review your submission and post it accordingly. Dave.