Market Analysis

Despite stocks incurring heavy selling this morning and US Treasury note yields moving down, mortgage-backed securities (MBS) offerred by Fannie Mae and Freddie Mac are only marginally improved this morning, as the flight-to-safety trade is gravitating to US Treasuries.  The Federal Reserves appears to be getting ready to sell part of its $1.25 Trillion in MBS purchased last year.   Investors concerns about additional supply hitting the market and its impact on current MBS issues could be keeping a cap on mortgages this morning.

In economic news, stocks are responding to reports of slowing growth in China and the Conference Board's June Consumer Confidence Index which fell to 52.9 vs expectations of a 62.0 reading.