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