This Week; markets should calm a little after last week’s FOMC statement that sent MBS markets screaming higher in price and mortgage rates lower. The Fed’s open-ended commitment to buy $40B a month of mortgage backed securities lit a fire under investors to continue selling treasuries and launch heavy buying of MBSs. The 10 yr note yield felt the pain, the yield on the 10 yr increased 20 basis points last week. 30 yr FNMA 3.0 coupon increased 73 basis points frm the close on Wednesday, the day before the FGOMC statement.
This week markets are likely to settle down compared to Thursday and Friday. August housing starts and permits, August existing home sales, Swept NAHB housing market index. Monday (today), the Sept NY Empire State manufacturing index expected -3.0 frm -5.9; the Sept Philly Fed business index out on Thursday expected at -4.0 frm -7.1. Minus readings indicate contraction. Although markets should quiet down, there is still potential of high volatility on any news that catches traders off guard.
TBWS
