Mortgage backed securities are approaching the apex finale of an exciting squeeze play which will determine which way interest rates pop out of the building pressure cooker. The five month trend is for lower pricing, which equals higher interest rates, but the YTD six week trend has been higher prices/lower rates.
Today’s Building Permits release mirrored last month’s 1.48M annualized filings, while Housing Starts dropped 10% from last month–but were only 2.1% beneath expectations. MBS experienced a little bit of bumping up and down post release, but as the day has worn on and traders see that the numbers published today are inline with the six month average of both statistics, today’s decline in newly constructed homes has had no real effect on interest rates.
Existing inventory for sale now stands at a 3.7 month supply, which is the longest period homes have sat pre-contract in the last six years.
