Mortgage backed securities (MBS) lost -14 basis points from Wednesday's close which was slightly negative for mortgage rates.

The benchmark FNMA 3.5 November coupon traded in a very tight range yesterday.

Initial Weekly Jobless Claims came in at 350K which was higher than the est of 340K. The prior week was revised upward from 358K to 369K. Plus, it is clear that California is still having issues updating their prior readings so these numbers are likely to be understated somewhat. Generally speaking a weaker than expected (which means more claims than the consensus estimates) is a slight positive for bonds.

However, the Trade Balance numbers were better than expected which is generally negative for bonds. As a result, any lift from the weaker Initial Jobless Claims were offset.

Across the Pond: A preliminary PMI reading out of China rose from 50.2 to 50.9. This signals economic growth and also provided some downward pressure on U.S. bond pricing.

Basically, there was nothing new or unexpected in the market place to cause MBS to improve and as a result, MBS traded slightly lower as the 10 year U.S. Treasury traded back above the 2.50 yield level for the day.

Mortgage RatesAnthony HoodEquity Investment CapitalOffice: 949-891-0067Email: tony@equityinvestmentcapital.com