Cautiously floating

Mortgage bonds received a nice boost this morning after the stock market continued its breakdown.  The stock market looks vulnerable for further slides, which is positive for mortgage rates.  PCE was reported this morning at 1.1%, a very anemic reading and again, positive for mortgage bonds.  The 10 year note yield also appears to be heading lower, as we broke through a significant barrier this morning.  As the 10 year note yield moves lower, mortgage rates will likely follow.

With both stocks and the 10 year note yield violating important levels of support, we are hoping for continued stability withmortgage rates.  Of course, it is difficult to say how long this opportunity will be available, so it seems to be a good time to buy or Refinance a home.  We will suggest carefully floating as we wait and see if the weakness in the stock market will continue.  As stocks sell off, mortgage bonds are often the beneficiaries, as investors look for a safe haven to park their money until they feel better about moving back into stocks.