September 27th, 2014 8:46 AM by Dale DiGennaro
Mortgage Back Securities (MBS)are down -4/32 (Fannie Mae 30-yr fixed with a rate of 3.5 at 102.04), which is close to morning levels. Some favorable repricing was seen. It was a very volatile session.
One reason for the price swings was an unusual occurrence. Bill Gross, the manager of the largest bond fund ($222 billion), switched firms. Speculating that his former bond fund will experience large outflows and will be forced to sell bonds in the future, some investors sold bonds today ahead of this possible action. A rally in stocks also hurt MBS. Today's economic data had little impact. The Dow is up 170 points. For the week Mortgage Backed Securities rose about 10/32.
Next week is a big week (and mortgage pricing will surely be affected), there will be a European Central Bank (ECB) meeting on Thursday.
The policy announcement from the ECB likely will have an influence on US mortgage rates. In the US, the important monthly Employment report will be released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, Pending Home Sales, Core PCE inflation, and Personal Income will be released on Monday. ISM Manufacturing and ADP Employment Change will come out on Wednesday. ISM Services, Construction Spending, Chicago PMI Manufacturing, and Consumer Confidence will round out a busy schedule.
Continue to follow Custom Lending's "Daily Rate Lock Advisory" for assistance in determining when is the best time to lock your loan!