cabehead1
02-27-2008, 04:39 PM
another good day for mortgage bonds with a second consecutive Alert to Float. Following worse than expected Durable Goods Orders (-5.3%) and New Home Sales (-2.8%) reports, bond prices began moving higher. Further gains were then realized after Fed Chairman Ben Bernanke’s testimony before the House Financial Services Committee. Bernanke’s comments were dovish toward inflation and focused attention on a weakening economy. Bernanke gave a clear signal of further rate cuts to come and the Fed Funds futures have priced in an 88% probability the Fed’s FOMC will cut interest rates by 50bp when it meets on March 18. Our benchmark FNMA 5.5% Coupon Bond ended 53bp higher to close at $99.34. Also in the news, the FOMC came out stating their informal inflation target is 1.5% to 2.0% between now and the end of 2010. Meanwhile, stocks bobbed up and down during the session and closed mixed with the Dow Jones Industrial Average edging 9 points higher to close at 12,694 while the NASDAQ Composite Index rose 8 points to close at 2,353. The broader S&P 500 Index was slightly lower with a small loss of 1 point to close at 1,380.
There is a chance interest rates will lower within the next couple of weeks.
There is a chance interest rates will lower within the next couple of weeks.