It doesn't matter where you live, today is a sunny day for mortgage pricing.

Oh that CPI!  We had hoped that inflation would read lower than expected, and it did!  February's Consumer Price Index, the economy's broadest measure of inflation dropped.3% with the less volatile reading that subtracts food and energy costs STILL dropping .2%.  That's great news for inflation, which was a key factor in driving rates up last month.

To make matters even better for the inflation-wary, the dollar is gaining a bit of strength, while oil prices are coming down as OPEC said this morning that output is higher than demand.  

But wait, there's more "fresh air."  Though not of huge impact, some mortgage quality panic is being soothed by a report by S&P saying that the end of write downs may be in sight.  Additionally, Carlyle group's financial woes that drug the market down earlier this week may also be mitigated by an announcement of their intention to "do what they can" to help their investors.

 Whatever you're reading this morning, it all adds up to great news for MBS.  Take a look:

MBS Price Data
Price
Change
FNMA 5.0
97-28/31
       +0-18
FNMA 5.5
100-05/08
+0-15
FNMA 6.0
101-27/29
+0-11
FNMA 6.5
103-10/12
+0-11

 

And take a look at the price curve shoot up after the CPI news was released:

 

 

Ah yes, that would be what we wanted to see this morning.  Expect significantly improved rates from yesterday.  But what will happen for the rest of the day?  The economic data is limited, with just consumer sentiment set to release.  We're hoping that comes in lower than expected.  So for the rest of the day we'll keep an eye on that when it is released in one hour, and headlines, and stocks.

I'm setting our first "alert floor" of the day at 100-04 on the 5.5 coupon (meaning that if prices on the Fannie Mae 5.5% coupon drop below 100-04, I'll post an alert and a graph.  This alert level would still be at much higher prices than yesterday, so you're protected.  I just want you to know if rates are trending down.  As far as an alert ceiling, just keep floating!  If we top out after stocks, all you need to know is if the price curve starts coming back down the mountain.

 Stay tuned and Happy Friday to you!