Mortgage backed securities are down big this morning following the announcement that President Elect Biden will take office in January as well as large advancements in the COVID vaccine. Pfizer, one of the leading candidates in the vaccine race, released news claiming their 2- dose vaccine was effective 90% of the time in their clinical trials. This is amazing for the world as well as the future of the US economy. While the S&P surged over 3% this morning in response to these two pieces of news, mortgage backed securities fell around 60 bps. Like we have talked about for months now, the two news releases that would hold massive weight in regards to mortgage rates were the presidential election as well as advancements in a COVID vaccine. We got both within the last week and expect further rate volatility in the near term.
With such a large erosion of mortgage security pricing, we are holding a locking bias unless you are able to closely watch the market.