Mortgage Market Update (part III)

Initial Jobless Claims continue to worsen as 542,000 filed this past week, far more than the 503,000 that was expected and the highest in 16 years. The four-week average of initial claims climbed by 15,750 to 506,500, the highest since January 1983. While the numbers are ugly, comparing them to previous markers is a bit unfair because there are more people today.

At 10am ET, the Philly Fed Index will be reported and while this may influence pricing in a typical market, we don't expect it to reverse the course of Mortgage Bonds.

Prices have barely peaked above the 200-day Moving Average. We will continue to float, but be mindful that things can change quickly. And a reminder about 2003, when Alan Greenspan came back and later said there is no threat of deflation - the refi-boom quickly ended and rates shot up dramatically higher. Stay tuned - we are living history.