Ben Helps Rates
2/26/10 Mortgage Backed Securities are plus 3bp this morning. Chairman Ben Bernanke finished his semi annual testimony on Capitol Hill yesterday. MBS and interest rates have moved in a favorable direction after his testimony. We have hit a layer of resistance at the current level. We would need to see some very bad news to break out of the current range. News released today show existing homes sales declined, along with consumer sentiment, and GDP. Chicago PMI was higher...

Look Kids, Big Ben
2/24/10 Mortgage Backed Securities are minus 3bp this morning. Chairman Ben Bernanke is on Capitol Hill this morning giving his semi annual testimony. The markets have cheered his remarks so far today. This is a 2 day event so we will see how markets continue to react. The results of the $42 billion 5 year auction will be released today at noon. Yesterday's results were better than what we expected. New home sales were a big disappointment this morning. Analysts expected...

Lack of Confidence
2/23/10 Mortgage Backed Securities are plus 34bp this morning. Consumer Confidence came in at 46 and analysts expected the reading to be 55. The news caused the Dow to fall 100 points and MBS spiked. We are still waiting to see what the auction brings at noon today. We believe that the auction will be weak and cause MBS to reverse their course. We continue our stance with a bias towards locking.

Yesterday I saw the Governor of West Virginia, Joe Manchin,...

Plenty of Supply
2/22/10 Mortgage Backed Securities are plus 9bp this morning. There is no high impact news being released until Friday. That means the markets will be focused on the auctions. There is an auction everyday this week except Friday. Last week the Chinese started selling off US debt. If they are sellers, and they previously were the largest holder of US debt, who are the buyers? The Europeans have their own problems with Greece. We believe this weeks auctions will show how difficult...

Rates are Hammered
2/19/10 Mortgage Backed Securities are minus 28bp this morning. MBS were hammered all day yesterday and continue to get hammered today. We have been talking about the Chinese not buying our debt anymore and how that could effect MBS. The Chinese started reducing their US debt holdings last week. We have written about the MBS purchase program ending and its effects. The FED said in their last meeting that they are ending the program. We said that the US could not continue...