Market Close

MBS  -20/32 @ 100.283       10 Yr Treasury -26/32  @ 2.804        Dow -66 @ 15,900

 

MBS prices declined due to hints from the Fed that tapering is likely to begin within a period of months. The first blow came when the Fed's Bullard said that Fed officials have not ruled out beginning to scale back their bond purchases at the next meeting in December. Later in the session, the Fed Minutes indicated that Fed officials expect improvement in the labor market to warrant tapering to begin "in coming months." The added demand for MBS from the Fed has been a major factor in keeping mortgage rates low, and any signs that the Fed may begin to taper sooner rather than later have consistently hurt MBS prices. Tomorrow, PPI, Jobless Claims, and Philly Fed will be released.

October Existing Home Sales declined 3% from September to an annual rate of 5.12M units, which was slightly below the consensus, but they were still 6% higher than one year ago. Total inventory of existing homes available for sale declined 2% a 5.0-month supply.