3/24/10

Mortgage securities did receive a little boost yesterday from Treasury's Geithner. Rates and prices improved slightly. We also had Fed Governor Yellen on the tape yesterday, saying that she believes that although the labor market is stabilizing at a high level of unemployment and inflation should stay low, and that the housing market has stalled. And we are in the middle of yet another 3-day period of auctions. With inflation expected to be tame, and the Fed expected to leave short-term rates low for an extended period, the argument can certainly be made to own some fixed-rate securities. This morning we’ve had Durable Goods +.5% for February, versus +3.9% in January and new home sales, expected to be better by 1.9%, fell 2.2%. After the strong news mortgage rates are worse this morning.