11/4/09

Good morning. The markets saw some volatility yesterday, with the stock market coming off its lows. Nonetheless, both the DOW and the bond market finished the day down. Factory Orders were up in September, the fifth increase in a row. One area of concern is obviously the Fed’s continued purchase of mortgage securities, thus keeping prices high, rates low. The government is slated to end its purchases of mortgage securities in the first quarter of 2010 and some analysts are predicting that this will add as much as a full percentage point to mortgage rates.
Today could be interesting. Not only will the Treasury announce how much it plans a rise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%. With all this in mind, mortgage prices are slightly worse this morning. Let me know if you have any questions.