End of the Week Recap on Interest Rates

Friday 2/27… End of Week Recap
Today turned out to be another rather boring trading day for mortgage backed securities. We opened to the plus side but throughout the day we gave back all the gains and closed down just a couple ticks. There was a big turn around in treasuries which put pressure on mbs to move lower. For the week, mortgage rates increased by about .125% to .25% in rate. The best rates of the week where seen on Monday and Tuesday with rates moving slowly higher the rest of the week. The main cause of treasuries moving lower in price and higher in yield is the upcoming government spending. The only way for the government to come up with the money for the huge budget introduced by President Obama, and for the huge stimulus/spending bill is to sell treasuries. With the record amount of new treasuries available to investors, it is driving the price of the treasuries lower which increases the yield or rate of return that the investor earns. With treasuries paying a higher yield it is attracting more buyers away from mbs and into treasuries. Thus, when treasuries have been selling off they have been taking mbs with them to higher yields.