Market Update Friday,
October 1st, 2010 4:48 PM ET
By John Sauro, North Atlantic Mortgage Corp.
Bonds Can’t Break Through
On Tuesday, Mortgage Bonds fell below the level of resistance of $101.00. This pattern has occurred eight times since early August, where Mortgage Bonds traded up to resistance, only to turn lower. What’s important to note is that mortgage rates which move in the opposite direction of Mortgage Bond prices, may have seen the bottom.
Home prices up in July
The Case Shiller Index reported that home prices in July rose 0.6% and have moved up 3.2% from July of 2009. While the pace of the gain was slower than the 4.2% increase seen in June, it still is a positive sign.
Could The 10 Year Note Yield Double in the Next Six Months?
Economists at the Fed have a financial model that shows that Treasuries are too expensive for the risk they carry. It suggests that Treasuries are at their most over-valued levels since the financial crisis in December 2008. Back then the 10-Year Note yield nearly doubled over the next six months. Will this happen again? It will depend on the economic data being released over the next few weeks.
We are currently recommending floating interest rates.
Fannie Mae 3.50% $100.72 +6bp