Friday October 27, 2010 4:50 PM ET
By John Sauro
Solid Gains for Mortgage Bonds
What a Ride?
In the last seven sessions the Mortgage Bonds went from $101.43 on October 21st to a close of $99.96 on October 27th and finally finished the week closing at $100.75. Mortgage rates followed in tandem within a .25% range.
The big reason for the volatility is due to the change in sentiment as traders are now looking ahead at possible inflation concerns.
Economic News
The Case Shiller index of home prices reported housing prices to be roughly stable in 20 major markets for the last 18 months.
Today the initial read on the Gross Domestic Product (GDP) showed a rise of 2.0% during the 3rd Quarter and was in line with estimates.
Also supporting Bonds was a read on Consumer sentiment, coming in at 67.7%, lower than expectations of 68.0.
The recent economic data, all a bit weak helps to support the Fed in next week’s expected announcement regarding the next round of Quantitative Easing (QE2).
I recommend floating rates, not locking.