MBS Pushing Rates Higher

Mortgage Backed Securities did not fair too well yesterday, and today they seem to be heading in the same direction at 11:00AM this morning, as they are a negative 8BPS, with the 10yr breaking the resistant level and is at 2.41%.  If this continues, then the new level will be above 2.52%.

Early this morning the NFIB (National Federation of Independent Business) released its small business optimism index and was in line with the estimates.  Some had predicted this index to decline, but it remained positive.  April was the sixth straight month of historically high optimism, a streak not seen since 1983, according to the NFIB. Five of the components of the index rose, three declined, and two were unchanged. The gainers were led by current job openings.

March wholesale inventories came in as expected, but final sales were very weak, unchanged from February inventories increasing but flat sales are not a good read. There was no reaction to the report. March JOLTS job openings came in just a tad higher than anticipated.

This afternoon the Treasury will begin the quarterly refunding with $24B of 3yr notes.  Not much of an impact at the long end of the curve but tomorrow Treasury will sell $23B of a new 10yr note. Tomorrow’s 10yr will add a little resistance to the bond and mortgage markets today.

Look for another very tight range today for mortgage rates. There's no economic data due out today that has the ability to move rates, but we are seeing some activity that is moving us away from our tight channel. However, as always, an unforeseen geopolitical event could move mortgage rates out of our long lasting channel and cause significant mortgage rate volatility.