Mortgage Rates--



A better open again this morning on weekly jobless claims at 8:30. Weekly claims were expected +2K to 350K, claims were -5K to 359K because last week’s claims were revised from 348K to 364K, an increase of 16K claims from original data. Continuing claims however continue to decline, 3.34 mil frm 3.381 mil last week; the 4 wk average on claims, a smoother look, 365K this week from 368.5K.

Q4 final GDP was +3.0% the same as the preliminary report last month. The data also showed corporate profits climbed at the slowest pace in three years, raising the risk that business investment and hiring will cool. To some degree the declining profits may justify the stance Bernanke and the Fed maintain that the economy isn’t on firm footing. To add more confusion to the economic outlook; the Business Roundtable’s economic outlook index increased to 96.9 in the first quarter from 77.9 in the previous three months, the Washington-based trade group reported. Readings greater than 50 are consistent with economic expansion, and this quarter’s measure is the highest since April-June 2011. 42% said they will increase payrolls, compared with 35% in the prior quarter, while 43% plan to hold their staffing levels steady.

A couple of weeks ago when markets were relaxing on Europe’s debt crisis, it is back on the table and adding support to US treasuries on some renewed safety moves back into treasuries.

At 9:00 the 10 yr note yield was down to 2.16% and falling, MBS prices up 6/32 (.19 bp). Stock indexes helping, the DJIA and other key indexes down indicating a lower opening at 9:30.

The DJIA opened -51, NASDAQ -17; the 10 yr at 2.16% and mortgage prices gained 6/32 (.18 bp) frm yesterday’s close.

This afternoon Treasury will complete the auctions with $29B of 7 yr notes. Yesterday’s 5 yr note auction didn’t impress with demand good but not as good as traders were expecting. On the 5 yr results treasuries and mortgage markets slipped into the close with mortgage prices down .12 bp frm 9:30 yesterday. The stock market fell yesterday, the DJIA down 71 points yet treasuries and mortgages didn’t take hold; this morning the weaker 5 yr yesterday has drifted into the background.

Other than the 7 yr auction this afternoon there isn’t anything on the schedule other than watching equity markets and keeping alert to any comments. Bernanke will speak again at 12:45 delivering his fourth of four lectures at the George Washington School of Business. Yesterday he continued to remind that the Fed would keep rates low on his concern the economy is still on soft footing. America’s policy makers don’t rule out further options to support growth, he said on Tuesday.

At 9:30 the 10 yr is testing its 20 day moving average; the momentum oscillators after running to oversold levels are back to neutral 50 levels on the 10 yr note yield. Interest rates have fallen 23 basis points on the 10 yr and 15 basis points on 30 yr mortgages; these are very good levels that should be taken advantage of. Sure rates may fall more but we don’t expect much more unless the Fed were to confirm another QE move that some continue to expect; even Bernanke said the other day an easing move isn’t off the table pending how the economy does in the next few months----and that is very questionable in either direction.