Reshaping Mortgage Market

Treasury Secretary Geithner will testify in front of the House Financial Service Committee today on the fate of Fannie Mae and Freddie Mac and the reshaping of the mortgage market. The Government Sponsored Agencies (GSEs) were taken over by the government 18 months and has been given $127 billion to run its operations. Fannie and Freddie now guarantee nearly half of the outstanding mortgages in the U.S.

The U.S. Treasury will sell $44B in 2-year notes today and will annouce the results at 1:00pm ET.

Existing Home Sales in February fell for a 3rd straight month coming in at a 5.02 million annual rate but above the 5.00 million that was expected. The previous month was 5.05 million annual units. This was the lowest level in 8 months. Inventories rose to an 8.6 month supply, the highest since August.

The dismal job market continues to put a crimp on new hiring, which has had a negative effect on the housing markets. The median price decreased to $165,100 from $168,200 a year ago. The bad news was that the index fell -0.6% in February but is up 7% since last year this time.

The Mortgage Bond market is trading near flat levels today being weighed upon by the pending Treasury auction results this afternoon. Stock markets moved a bit higher after the housing data was released. The Dow Jones Industrial Average hit an 18-month high of 10,837.59 today.

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