This morning April durable goods orders came in better than estimates, while March orders were down.  The report was better than expected, but still not solid.  The GDP calculation figures for this quarter were less positive, indicating that business investment is slowing down.  Gains in inventories may help offset some of the softness in capital spending this quarter.

This morning the 10 yr. note opened at 2%, down 2 bps and the MSB's increased 20 bps from yesterdays close.  The DJIA opened -54 and the NASDAQ at -19.

Markets have realized the Fed will only make a move when the economy warrants it and which way it swings will all be dependent on economic conditions.

Markets are likely to remain uncertain until the May employment report is released on June 7th.  Analysts are convinced that interest rates will not move much on any improvements and suggest taking advantage of any rallies to get the best rate available any your loan to the table.

The bond and mortgage markets will close at 2pm today, while the stock market will go the full day.
Next week does not have much data and the markets will be closed on Monday.

Remain in constant contact with your mortgage professional.
Have a great holiday weekend.

- Michael Corboy

Yesterday the Federal Reserve confused markets with conflicting comments.  This is due to either the Fed testing the waters on reaction to unwinding QE's, or the Fed officials are on different pages.  The Fed clearly upset markets resulting in another huge spike in rates and what may be the beginning of a major correction in the stock markets.

Weekly jobless claims were released this morning with no noticeable reaction to the data.

Most all major stock markets around the world are in decline today and continue to show increased volatility since this mornings opening.

At 10am, April New Home Sales increased 2.3% (the annual increase is the largest since 1963).  As a result, builders are able to increase prices and now markets will look to May's sales data on both existing and new home sales to see how the Fed will adjust or react.

The next two weeks will see a major increase in volatility.  The 10 yr. note is currently sitting at 2.04%, an increase due to what many believe to be an over shooting of the market.

The drive for lower rates is believed to be over, with the expected low of the 10 yr. note to be 1.85%.  Any pull backs in rate will not be substantial, nor are they expected to last long.  Yesterday saw rates bounce around by 100 basis points in pricing, or about .25% in rate.

Take advantage of any improvement and lock your rate to capitalize on market adjustments.

The upcoming economic calender will be relatively quiet with all eyes on the next employment report due out on June 6th.  These days with MSB's being oversold, reports are carrying more weight than normal.

- Michael Corboy

Yesterday, in anticipation of Bernanke's testimony, members of the Fed were quoted in saying that "Because the outlook is uncertain, we are uncertain which way(up or down) the next change will be.  It will take policy makers 4 to 5 months to know whether the economy is healthy enough to overcome federal budget cuts and allow the central bank to begin reducing stimulus".

The Fed simply isn't sure about the path of the economy at this point.

Today's testimony highlights showed that there will be no slowing in Federal Reserve accommodation.  Bernanke warned that tapering down stimulus would not be beneficial for the economy, citing that premature tightening of monetary policy would carry a substantial risk of slowing  or even ending the economic recovery and cause inflation to fall further.

Bernanke described the US jobs market as improving, but still "weak overall".

In the Q&A portion, Bernanke said tapering is a possibility, but only that.  Should labor improve, while inflation pressures remained low, the Fed would end its asset-purchasing program.  Even if the Fed begins to step down its pace, the move would not automatically point to an automatic complete wind down of the program.  If recovery were to falter, the exiting strategy would be delayed.

Today's release of Existing Home Sales showed an increase of 0.6%, with sales of single family homes up 1.2%.  In addition, the median time for a house to be on the market fell dramatically to 46 days.

Sales of existing homes appear to be hitting stride, however the threat for May sales is the sudden increase in mortgage rates has lead to sudden declines in mortgage activity.  According to today's MBA Purchase Applications release, the purchase index decreased by 3% and the refinance fell by 12%. 

At 2:00pm, the minutes from the 5/1 FOMC meeting will be released.

The 10 yr. note has swung drastically today in reaction to all of the economic data, opening at 1.93% dropping off to 1.89% and hitting the daily high of 2.05%.

Today's rates will continue to be highly volatile.

- Michael Corboy

Yesterday the 10 yr. note closed at its highest rate since the start of the rate increases.  This morning set a new high at 1.98%, as MBS prices are once again under pressure and the Bond market is heading towards its first loss since January.

Today has no economic data and all of the focus is on tomorrows releases for the Fed.  Many believe that monetary help has run its course and has not achieved its goal.  With unemployment still high and no inflation, the outlook  for economic recovery does not look good as a result of little to no pricing pressure to motivate consumer spending.

If the 10 yr. note closes above 1.97%, the impact and outlook will be very negative for interest rates.  With higher rates/lower rebates on the horizon, consumers who have seen expected interest rates spike need to realize that the market is showing no signs of rates coming back down any time soon.

It is better to stop chasing rates and lock in now to take advantage of market volatility and cash in on any high points realized.

- Michael Corboy

There are no economic reports scheduled for today or tomorrow.  The market is waiting for Wednesday, when Ben Bernanke will testify to the JEC on the state of the economy and will release the minutes from the May FOMC meeting.  The April existing homes data will also be issued on Wednesday.

The impact of these reports will be interesting, with markets presently debating when the Fed will begin unwinding the QE's and market annalists wondering what impact a reduction in MBS purchases will actually have.

It is unlikely that Bernanke will begin winding down the QE's until there is more economic data confirming that the economy has in fact gained momentum.

With the Memorial Day Holiday on the horizon it is likely to see a reduction in trading volume.
The 10 yr. note closed at 1.95%, a level that is expected to keep rates elevated for the near future.  Technically, the 10 yr. note will have to fall below 1.80% to expect any improvements and reduction in rates.

ADVICE:  Position yourself to take action on any market improvements.  Have your application and submittal package ready to go so that your mortgage specialist is able to lock immediately.

- Michael Corboy

Today, the University of Michigan Consumer Sentiment Index improved strongly to 83.7.  This index is generally volatile and tends to reflect sentiments from the equity markets and the cost of gas.  April leading indicators increased by 0.6%.

Russia's GDP increased , but the economy seems to be grinding to a halt in the face of a recession in the European area.  Most of the main global economies are weakening, but as long as the Fed and other central banks continue to maintain low interest rates, the stock markets are likely to continue improving.

Be on guard for any changes to the Fed's stimulus plan.  Unless there is a major change with economic outlooks and data to support it, the global equity markets may see a major reversal.

The interest markets had a nice day yesterday, but the bond market remains very volatile.  Yesterdays improvement was a momentary reaction to the current "oversold status".  So far, no follow through of any significance from the one day rally has been realized.  The economy remains to be a picture of uncertainty, with reports from various Federal districts coming in softer than expected.

Early this morning, rates remained unchanged from yesterdays close, but have since been hit by one negative adjustment.

OUTLOOK:  The 10 yr. Note must close below 1.80% before any change will be realized.  There is a likelihood that the bond and mortgage markets will tighten up in the near-term.  Expectations are for the 10 yr. and MSB's to slow down while investors and traders regroup and reassess the recent spikes.

In all likelihood, mortgage rates should remain relatively unchanged for the next week or so.

- Michael Corboy

Today weekly claims increased to the highest level in six weeks adding more confusion as to the actual condition of the employment sector.  This increase caught many by surprise and heightened concerns as to the actual state of the economy.

April housing starts declined by more than 10% greater than projections.

Yesterday, the 10 yr. note spiked to 1.97% and experts predict that it will be extremely difficult for the note to match this years low of 1.56%.

The stock market so far has fared well in reaction to the weaker data, which keeps the Fed on the fence about an early exit from its stimulus package.

This morning saw slight improvement in the bond market and better MBS pricing, which has resulted in two favorable adjustments to rates (depending on your available lenders).

The following link is a great article and good news to anyone in the industry or looking to purchase or refinance their home:  http://money.cnn.com/2013/05/15/real_estate/home-appraisals/index.html?source=linkedin

ADVICE:  Remain in constant contact with your mortgage professional.  There is an opportunity to capitalize on improvements, but any delay could result in a loss in rebate or even an increased rate.

- Michael Corboy

Yesterday, April Import and Export prices declined adding to the view that inflation is no longer a concern, giving monetary officials from the Fed and ECB have more room for expansion.

The stock market is overbought and the 10 yr. and MBS's oversold; coupled with the decrease in inflation concerns, may attract investors.  The speed seen in the bond and mortgage markets is concerning in terms of the outlook for interest rates.  These trends have been driven by confidence rather than technical data, leaving many analysts and forecasters scratching their heads.

The purchase and refinance index dropped sharply and the continued increase in pricing  raises the risk of rates effecting seasonal activity in the housing sector.

Yesterday rates closed 38 bps. up and today has seen two negative adjustments since this mornings slight improvement.

Most economic measurements since March have been lower than the estimates and any improvements in rate will most likely result from Fed policy adjustments or announcements.

ADVICE:  Proceed with applying and have your purchase or refinance firmly in place in order to capitalize on any adjustments realized in rates.  With the current volatility, holding off on application until rates drop may result in missing the boat.

- Michael Corboy

Last week saw another increase in mortgage rates due to the growing consensus that the best rates may be behind us.  This coupled with the increase in home pricing should urge potential home buyers to act now.

This week has a lot of economic data, which will most likely result in market volatility.  These fluctuations may allow consumers to capitalize on some of the rebate lost last week.

Today, retail sales came in higher than expected, easing concerns that Americans are holding back on spending.

As the Yen continues to lose value, as a result of Japan's effort to weaken its currency, has lead to a decline in demand for US bonds.

There is no evidence of the Fed ending its stimulus plan, but speculation is that the Fed will end its monthly buying of treasuries and mortgages earlier than previously announced.

Professionals do not currently see any evidence of rebound in the short term, however probability shows the likelihood of some rebound, the extent of which remains unknown.

ADVICE:  Remain in constant contact with your mortgage professional this week, as it will be necessary to do so to capitalize on any improvements that result from MBS;s daily swing.

- Michael Corboy

Today, interest rates continue to increase with the 10 yr. at 1.86% in early trading (an increase of 22 bps. since last Friday).  The speed of the increase with continued selling suggests that long term treasuries are not likely  to get back to last weeks levels any time in the near future.

The rapid increase and little attempt to capitalize on the higher rates suggests that we may have hit the end of the rate decline cycle.  Investors, large banks and fund managers are expecting improvements to the economy in May.

The Fed's easements continue to fail to meet objectives, leading to a growing view that the Fed may begin winding down its stimulus moves.  This may not occur until the end of the year, but markets are already reacting to the possibility.

The US annual budget deficit for 2013 fell and the Treasury will have income to cover any debt ceiling concerns through September, which is the last month of the fiscal year.

Bernanke is scheduled to give a short speech today and we ill update you of any major announcements.

At this time we suggest locking loans that are scheduled to close in the near future.

- Michael Corboy

Yesterdays reports showed the weekly jobless claims to be the lowest in five years, implying that there has been a reduction in firings, but no substantial increase in hiring.  The number of people collecting jobless benefits fell, but 11.7 million people still remain unemployed.


On Wednesday, the treasury issued a new 10 yr. note which will now be substituted as the "on-the-run" 10 yr. note that markets will track.

March wholesale inventories were in line with estimates, but sales came in below expectations.

The BOE left its stimulus program unchanged, keeping interest rates a record low.

Freddie Mac and Fannie Mae both showed profits for Q1, implicating that profits will continue and the bailout funds will be returned in full from the housing market collapse.

MBS's are still maintaining there levels, but as long as rates continue to increase it is only a matter of time until they begin to impacted negatively.

There has been no relief on interest rates from last Friday's spike; implying that the market adjustments were not simply an over reaction.

Stay in constant contact with your mortgage professional in order to stay ahead of the current volatility.

- Michael Corboy

European stocks improved for the second straight day with this mornings opening.

Poland, Hungry, Australia and the ECB have all cut rates, following the Fed's lead, as there has been little to no economic improvement throughout the world.

The Refinance Index increased to its highest mark since December and the Purchase Index increased to its highest level since May of 2010.

As the equity markets continue with no major decreases, any rate improvement is not likely to drive rates back to last weeks levels.  Volatility is likely to increase as various economic measurements are released and pending on how they compare to the projected forecasts and measurements.

The Treasury auctioned 24 Billion of 10 yr. notes, resulting in a decrease of 3bps. from this mornings opening.  This may result in minor rebate improvements.

WE SUGGEST CAPITALIZING ON ANY REALIZED GAINS TO LOCK IN YOUR RATE.

- Michael Corboy

Prior to Friday's employment report, every economic data report came in lower than expectations, resulting in the overall outlook that the Fed would increase its easement based on the FOMC statement released last week.  Friday's report has analysts reassessing the outlook.  With one month of data, we do not expect that it will result in a serious impact.  However, if economic data continues to trend upward, the Fed will very likely decrease its purchasing of MBS's.

The 10 yr. note has lost all of its momentum resulting in an increase to interest rates and virtually leveling all gains that had been realized since mid April.

Treasury rates continue to increase this morning resulting in weaker MBS prices.

We will need more economic data next week to clarify how the Fed will react.  The stronger report has increased concerns that the Fed will possibly take the QE away sooner than anticipated.

Stay in contact with your mortgage specialist to insure that you capitalize on any improvements and avoid any loss of rebate currently available.

- Michael Corboy

The last three week of mortgage rate improvements were canceled out within hours on Friday in reaction to the April unemployment data.  This resulted in the largest single day increase to the 10 yr. note in a number of years.

With little to no economic data on this weeks calender, all eyes will be on Europe and China for any major impact on rates.

Treasury will hold auctions on Tuesday and Thursday and Ben Bernanke is expected to speak on Friday to address last weeks events.

- Michael Corboy

Weekly jobs report fell 18 thousand, the lowest in five years.  The stock market reacted positively, which resulted in a slight decline treasuries and the MBSs taking the largest hit.

The ECB cut its base rate to 0.5%, the lowest on record, resulting in an improvement in European stock markets.

The remainder of the day is expected to be quiet, with all forecasters focusing on tomorrows April unemployment report, which is notorious for its volatility.  Even a stronger than expected report is not likely to change the long term outlook on the bond and mortgage markets.

- Michael Corboy

This week some of the focus will be on EU.  Global inflation is falling as the weaker economies struggle to keep prices despite their downward pressures.

Today's ADP data showed that the employment sector is not growing.  The current job market is not able to match the new job entrants in the labor force.  This is believed to be due to fear of health care costs, potential tax increases, soft retail numbers, slowed consumer spending and increased regulations.

This morning showed that total mortgage applications had increased 1.8% from last weeks report.

Treasury will increase its auctions, despite the increase in tax revenue.

March construction spending and April's ISM manufacturing index pushed stocks down and the 10 yr. note to 1.63%.

At 2PM, the FOMC will release its policy statement which is likely to confirm that the Fed will continue its QE purchasing commitment.

It is becoming more and more likely that the 10 yr. note will continue to decrease, although this decline is expected to be slow.

- Michael Corboy