Mortgage Rates Headed North
Global Stock markets are on the rise this morning as central banks all around the world are reassuring investors that easy money policies will remain in place. The rally in the stock market is pressuring mortgage backed securities to their lowest levels in over a year.
The Wall Street Journal reported earlier this morning that a survey done recently most of the market participants said that they Federal Reserve will continue to buy mortgage bonds at an $85 billion a month rate through the end of 2013 and most likely well into 2014. QE 3 will not be ending anytime soon.
The Case Shiller Home Price Index rose 10.9% year-over-year, above the 10.1% that was expected and was the best annual gain in seven years.
Also weighing on mortgage backed securities is the anticipation of a total of $99 billion in 2, 5 and 7 year notes hitting the mortgage bond market this week.
The technical picture for Bonds is not looking very good at the moment. The 3% coupon has now fallen through support at 101.47 and is near the second level of support at 101.25. If mortgage bonds fall through this floor of support, prices could drop a ways farther and cause mortgage rates to continue their rise.