FLOAT OR LOCK? Daily Phoenix Interest Rate Update and Recommendation - Sept 1st, 2009

Current Pricing of FNMA 30 Year 4.5% Bond: $100.53
+6 bps (Prior Close – $100.47)

Market Update: The Mortgage Backed Security (MBS) pricing is higher this morning from yesterday's close. MBS are benefiting from nervous stock investors, as September is typically one of the worst trading months of the year.

Economic News: Pending Home Sales rise 3.2% in July versus estimates of a 1.5% increase. The Institute of Supply Management Index also beat estimates coming in at 52.9, better than expectations of 50.2. A reading above 50 indicates expansion, while a reading below 50 indicates contraction, so this is a another positive sign for the manufacturing sector.

Recommendation: FLOAT