Written By — Chad Emerson
Happy Friday to all. Second verse same as the first. It appears that Eco news today caused a mass sell-off of mortgage backed securities today when it was announced that economic growth was not as sluggish as many thought it would be. Although first estimates of the GDP were 2.4% and the revised numbers came in at 1.4%, you would think that just the opposite would be happening and mortgage backs would be more favorable than stocks, but, many forecasters were expecting the revised GDP numbers to be closer to 1.2, and 1.4 looks a heck of a lot better than 1.2. Now, patience is not a known trait of a Wall Street Investor, so this news caused a sell off of MBS and purchases of stocks. As I write this, the Down is up a robust 100 points, the NAZ is up 22 points and our friends, the mortgage-backed securities are down -16.
By no means should this be taken as a sign that the US economy is back on track. Big Ben (Fed. Chairman), stated that the Fed is still prepared to take any additional action needed to ramp up the US economy if needed. This of course only adds more octane to Wall Street Investors’ coffee. Although any gains that the MBS made this week were completely erased by today’s sell off, I’m sure that this is a temporary result of profit-taking.
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