Last week's market experienced an uneasy calm in mortgage rate adjustments.  There was plenty of daily movement, allowing for pricing rates to fluctuate as much as .5%, but never experienced pricing adjustments and were cancelled by the end of daily trading.

This week is a BIG ONE for interest rates.  The economic calender is full of data.  April's unemployment report will be released, however this will not be the focus as the forecaster's  do not believe that the report will tell the true tale of job creation.  The main focus will be on the FMOC meeting that concludes on Wednesday.  We are eager to see how the Fed treats the present economy, which is slowly showing signs of slowing, increasing the concerns of deflation.

At the moment, the Fed is failing on both sides of its stated goals:  employment is not moving after years of printing money and lowered rates and recent inflation targets are not being met.

Ever since the Fed began its QE's, there has been a fear that it would result in inflation.  Gold and commodities have increased substantially and the bond and mortgage markets benefited due to the decline in rates.

The global economy is slowing and the major countries are feeling the results.  Declining prices are good for the consumer, but the danger lies in the possibility of consumers holding off on spending; in anticipation of prices dropping even more.  This has resulted in companies postponing investments and hiring, eluding to an even lower outlook.

According to the AP, "The number of signed contracts to buy homes rose in March to the highest level in three years.  Sales are believed to actually being held back by a limited market supply.  There continues to be proof around every corner that the housing market is well on its way to recovery, helped along by the current low interest rates".

THIS WEEK'S OUTLOOK:
There is a lot of economic news due, meaning that volatility is for certain.  Improvement may be found, but be ready to lock if the market swings in the opposite direction.  While interest rates have remained stable, we are still seeing an increase in market swings due to the constant movement of MBS's, impacting how much the consumer will pay in closing costs when locking a loan.

ADVISE:
Keep in constant contact with you Mortgage Originator to insure that you capitalize on any gains and avoid any market pitfalls.

- Michael Corboy

Today's mortgage pricing was not impacted by yesterday's volatility in the market, which was caused by the hacking of APs Twitter account.

Today, Treasury will auction $35 Billion of 5 yr. notes.  Yesterday's 2 yr. auction had lack luster results.

Germany is beginning to feel the results of a decrease in output and speculation is increasing that the ECB will lower interest rates when it meets on May 2nd.

March durable goods were reported this morning, coming in at its weakest level since last August.  The reaction led to initial improvements in US stock index futures and provided support in the bond and mortgage markets.

Weekly mortgage applications showed an overall increase of 0.2%, with both the purchase and refinance index's increasing by 0.3%.  The purchase continues to climb slowly, showing a positive outlook for the spring housing season.  The index is currently at its highest level since the stimulus efforts of May 2010.

The 10 yr. note continues to remain at its current level of 1.7%, leading to little or no change in mortgage rates.

- Michael Corboy

This morning saw markets opening strong based on the information that the European Central Bank will cut its interest rates in an effort to stop the economic decline.

Another factor was a report showing the economy of China to be slowing, but this in fact a deliberate effort of the Chinese government to fend off inflation.

Improving prices in the housing market will increase the supply.  The February housing price index showed an increase of 1.9% for housing in New Jersey and Pennsylvania.

We are awaiting the results of today's treasury auction and will update you as soon as the numbers are received.

Today saw a loss in the rate markets due to the improvements in the stock market.

HOWEVER:  If the 10 yr. Treasury Bond closes below 1.7%, we expect to see a reduction in interest rates for tomorrow.

- Michael Corboy

This week's economic calender includes:

• Tomorrow, Treasury will begin is monthly auctions of 2, 5 and 7 year bonds.
•  March existing and new home sales.
• March durable goods will be released on Wednesday.
• On Friday, markets will get the first of three reports on Second Quarter GDP.

Interest rates are driven by movements in the key stock indexes, however, last week's volatility in stocks, gold and oil never crossed over into the Bond Market and MSB's.

Stocks are currently experiencing increased volatility, with wide swings, however, no sustained trend has been seen, leaving many waiting for a major correction.

ADVISE:  Rate Improvements will be hard pressed and any improvement is expected to be minimal.
This week is an important week to stay up on the market for signs of which way the rates will swing.
If the 10 yr. note exceeds 1.75% at closing, expect interest rates to increase in response.

- Michael Corboy

Yesterday, the DJIA was down 170 points, prior to the tragedy that took place in Boston.  However, this morning the market was able to rally with the reinforcement that the FED will continue its stimulus efforts.

Housing starts had the highest gain in seven years, however this was offset by the decline in building permits.

March industrial production doubled and the FED production was revised to +1.1%.

No additional economic data is due out today, but three FED officials are scheduled to speak.

We will keep updated on what information they provide.

Our thoughts and prayers are with all in the city of Boston and to the spectators, marathon participants and innocent bystanders that were affected by yesterday afternoon's tragic occurrence.

- Nancy Bierman

This morning showed a drop in the rate of the 10 yr. note, putting pressure on the stock market.  Recent patterns have shown that the market will most likely not show recovery from this until the final hour of trading.

This week has numerous key economic measurements:

• March housing starts and permits.
• April NAHB housing market index.
• March industrial production and factory use.
• Philly Fed's business index.
• The Fed will release it's Beige Book.

Tensions between the US, S. Korea and N. Korea remain at high levels, but global markets are not showing much concern as of yet.

Traders are continuing to play the stock market against treasuries and as this week is very active with the release of each data point having the potential to swing the markets.

WE EXPECT AN INCREASE IN VOLATILITY THIS WEEK!

- Nancy Bierman

The Federal Reserve made a mistake and released the FOMC minutes a day ahead of schedule.
The following was reported:

• Moderate economic growth has resumed.
• Labor markets showed signs of improvement, but the unemployment rate remains elevated.
• The Committee will continue to purchase MBS and Treasury Securities at the current pace.  *If the economic outlook deteriorated, the pace would be increased.
• Housing Sector showed signs of improvement.

The DJIA, NASDAQ, S&P and 10 yr. Treasury bond all opened up from yesterday's closing.

At 1 PM the Treasury will sell $21 Billion of 10 yr. Treasury notes.

As the rates have continued to fluctuate, this weeks data shows that the purchasing and refinance markets had adjusted back to past levels, offsetting the shifts reported last week.

We continue to keep a watchful eye on the EU, Korea and the Market Indexes to see how long the rates will remain at their current levels.

-Nancy Bierman

Last week's decrease in interest rates was due to surprising economic data and global news from Korea.  IT WILL BE MORE LIKELY THAT RATES RISE THAN SEEING THE CONTINUED IMPROVEMENT:  ADVISE IS TO LOCK!

-Nancy Bierman

Fannie Mae and Freddie Mac are now showing solid profits.

Home Purchase applications have increased, as well as, the demand for Government loans.

Bidding wars have resurfaced in many major markets.  Home listing inventory has decreased and any delay may result in comparable properties increasing in price. 

Interest rates are expected to climb back to 4% before years end!

ADVICE:  Purchase now, as the increase in interest rates will greatly affect the cost of home ownership.

- Nancy Bierman

March Employment Report is due on Friday and is reported to be lower than expected.

No Market Reports are expected to increase rates much due to the offset by the turmoil in Europe.
Cyprus pushed the 10yr. note down to 1.86%., proving that the European Union Banking crisis is not over.

Last Thursday the S%P 500 Index posted a new high just three weeks after the DJIA Index climbed to a new all time high.

The consensus is that the only factor keeping rates from increasing is the FED continuing to purchase treasuries and Mortgage Backed Securities through the end of the year.

-Nancy Bierman