6/19/09

Mortgage backed securities (MBS) prices are lower (rates higher) in quiet sideways trading, typical for a Friday in June, as stock markets are higher and there are no economic reports due out today; MBS prices opened higher, only to fall back into negative territory. Market participants are concerned over the looming supply of Treasuries, driving investors out of fixed income assets, like MBS, into more riskier investments seeking higher yields. The demand from foreign investors will be closely watched, as they are crucial for continuing the administration's record budget deficits. Gold prices have declined amid signs of recovery, after investors bought the metal to protect against plunging equities and a deepening recession, and are buying other assets such as real estate, reversing flight to quality trades. Crude oil prices rose for the third day on speculation that fuel consumption will climb as the global economic downturn subsides. Today is a Friday, so volatility is probable this afternoon