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Friday, August 8, 2008

Rate Watch: Locking

Mortgage Bonds are up this morning after the Second Quarter Productivity Report in non-farm business was released at 2.20%, slightly lower than estimates of 2.50%.

What is particularly interesting about this report is that employers eliminated 165,000 workers in the Second Quarter, so what happened is that we got more production from fewer workers! I guess this is what they used to call "American Ingenuity"! When you get more production from fewer workers, this is good for Bonds becuause it helps lower inflationary pressures.

As predicted yesterday, prices went up to the 25 day moving average and have now bounced off this level. I am recommending locking today and taking advantage of the price improvement and lower yeild we got yesterday and this morning.

P.S. Oil is down again this morning at $116 per barrel, well below the $147 peak from last month. What's crazy is that we think $116 per barrel is cheap!