Friday, September 4, 2009

FLOAT or LOCK? Daily Phoenix Interest Rate Update and Recommendation - Sept 4th, 2009

Current Pricing of FNMA 30 Year 4.5% Bond: $100.59
-16 bps (Prior Close – $100.75)

Market Update: The Mortgage Backed Security (MBS) pricing is moving lower this morning from yesterday. The Jobs Report for August has Stock traders feeling very good this morning. The inflation component of the Jobs Report also shows low inflation which is good news for bonds as well. The initial reaction was as you would expect, a lot of volatility.

Economic News: 216,000 jobs were lost in August, which is better than the 230,000 job losses that were expected. While this appears to be good news, these numbers are often revised in reports issued in future months. What we do know for sure is that the overall unemployment rate climbed to 9.7% last month, which is more than double what it was two years ago and marks the highest level seen in 26 years.

Recommendation: LOCK

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