Good Economic News = Bad day for Interest Rates
MBS are down -10/32 (FNMA 30-yr 3.5 at 102.21), around 5/32 below volatile morning levels, and near the low for the day. Unfavorable repricing took place. Strong data and a stock market rally caused investors to sell MBS ahead of tomorrow’s Fed meeting. Consumer Confidence rose to 121.1, above the consensus of 117.0. Demand was stronger than average for the 2-yr Treasury auction. The Dow is up 100 points. Tomorrow, New Home Sales will be released at 10:00 et. The results from the 5-yr Treasury auction will come out around 1:00 et. The next Fed meeting will take place tomorrow at 2:00 et. No change in the federal fund’s rate is expected, but investors will be looking for guidance about future monetary policy.