Very rough first half of the week and today is topping them all.  Thursday of last week we saw some recovery in the bond market and rates. Friday the market deteriorated and the 10 year long bond closed at 1.95%.  Monday and early Tuesday we saw an upward drift with the long bond bumping against 1.97% before closing at 1.93%.  Today we saw improvement early and since 11:00 EST we've moved sharply up with the 10 year sitting (momentarily) at 2.03%.  For mortgage rates, we've had two re-pricings today, both for the worse and it doesn't appear it's over yet.

 So what's happening today? 

We've spoken for the past several weeks about the pessimistic feelings from the investors in the bond market.  In their opinion, the economy is improving and bonds are

One very bumpy ride so far this week.  Most the news is good for the economy and bad for rates. Even more important is the mindset of the investment market, they all seem to believe the very extended bond market rally is over and rates are headed up.  Feeding that belief is last Friday's interview with Bill Gross, fund manager for the country's largest bond fund.  His opinion is the rally is over and rates are on their way up.  The market is definitely listening.

So far this week, we've seen a number of major reports coupled with lots of minor reports.  In the more important category are:

Retail Sales which were expected to be down 0.3% but were actually up 0.1% despite a drop in gasoline prices.  Most all classifications of sales were up.  

All-in-all, a quiet start to the week. As we spoke about Friday, there are no reports of any consequence the first half of this week and the markets have just followed through on Friday's data.  On Friday we saw the 10 year treasury jump from 1.62% up to 1.74% by closing.  Since then we saw a slight climb up to 1.77% and then a retreat back to 1.75% today.  With no reports and no real economic news, the markets have stayed put.  

The one report of interest was the Consumer Credit report. It measures the amount of consumer credit outstanding and gives us an idea of future spending trends. February's numbers showed a very large jump at $18.6 billion and almost all was in installment credit (as opposed to credit cards) due to high car sales. March showed

A very few investors are hanging onto Wednesday's low mortgage rates as today's Employment Situation Report once again was completely contrary to Wednesday's ADP report.  ADP, as we noted Wednesday, is notoriously inaccurate and this is another example.  The yield on the 10 year long bond rose a full eighth of a percent this morning and most mortgage investors followed... to some degree.

After several weeks of mostly pessimistic economic news, investors finally bought in and dropped interest rates below the 1.68% support level and mortgage rates dropped from 3.5% to 3.375% by midweek.  Wednesday's ADP report showed last month's employment level being revised downward from 158,000 to 131,000 and this month's numbers coming in well below the consensus

The fall of interest rates continues as more economic information shows continued weakness in the economy.  The 10 year long bond fell to a new low for the year of 1.62%.  While this is a new low for 2013, we are still well above the late July record lows of 1.40%.  That being said, rates on 30 year loans are great at 3.375%. 

So what is causing the fall in the rates?  The first part of this week, we saw a larger than normal number of economic reports and here's a quick summary:

Monday's Personal Income and Outlays Report showed that while income was only up a disappointing 0.2%, spending grew more than expected at 0.2%.  Both numbers were within the consensus range but well below last month's numbers.

Pending Home Sales were slightly stronger

Pessimism on the economy finally won out. After failing to crack the 1.68% support level four times, the bellwether 10 year bond saw the bottom fall out today and mortgage rates followed suit as 30 year mortgage rates finally dropped to 3.375%.  For the past several weeks we've been talking about the investment market not being convinced that rates would stay down for a prolonged period.  Today the investors capitulated and moved to the lower bond coupon as 10 year rates dropped from 1.70% to 1.65% at mid-afternoon.  That's the lowest rate since the end of December.  Great news for a spring weekend of home buying.

Since Wednesday, we've seen two major reports plus the not-normally-so-important Consumer Sentiment Report. Yesterday's Jobless Claims

Some excitement in the market yesterday but no real movement.  Yesterday morning we saw a very sharp drop in rates as a hacker sent out a tweet that the White House had been bombed.  With that tweet the markets lost about $200 billion dollars in value and the bond market dropped sharply, lowering interest rates and bond yields.  AP quickly announced the hoax and the bond market quickly recovered, closing the day 1 tick above its starting point of 1.69%. All that seems harmless unless you were one of the investors who moved out of positions at a loss on a hoax.  Today has been uneventful and at mid-day the 10 year bond was trading in the same range as yesterday.

So far this week we've seen Existing Home Sales come in below expectations.  Most all of the

The long bond/mortgage rate rally continues and rates continue to drift downward.  All that's good for homebuyers and Realtors.  The bellwether 10 year long bond slipped down further on Monday, bounced up some Tuesday morning and then dropped further this morning before a slight adjustment upward this afternoon.  The net result for the bond is it's down to 1.7%, matching last week's brief low.  For mortgage rates it means that 3.5% with no lender points or fees is readily available and a few investors are starting to quote 3.375%.  The 15 year mortgages aren't following suit and there is little demand for 15 year loans nationwide.   Monday's economic reports were weaker than expected and while the Housing Market Index was close to target, the Treasury

After a week of climbing rates, the end of the week was great for bonds.  We started the week with rates climbing off their lows of last week and steadily climbing all week.  Yesterday they topped out at 1.80%, up from Friday's low of 1.68%.  For  mortgage rates, we'd moved back up from last week's 3.5% to 3.625% on the 30 year.  This morning the bottom fell out and bonds ended the day back down at 1.72% and we saw mortgage futures ride the bonds down to 3.5%.  All-in-all a great way to end the week. 

So what happened since Wednesday? Yesterday's Initial Jobless Claims report came in below expectations and below the consensus range floor.  Remember, higher jobless claims mean more people are out of work and that's good for rates, bad for the

After a great week for interest rates, we are seeing a reversal this week.  While mortgage interest rates are holding at 3.5% for the 30 year, the cushion for the rate is gone.  Unless we see a reversal tomorrow morning, rates will move back to 3.625%. The 10 year long bond has jumped from its low on Friday of 1.68% to a high this afternoon of 1.80% - or an eighth of a percent.  Lock your rates today!

So what's the cause?  With no reports of consequence, it's pretty much a case of not any one thing in particular but several smaller, worrisome things.  The most prominent would probably be an expected adjustment to last week's large drop.  When rates drop nearly a quarter percent in less than 2 weeks, there's going to be some adjustment.  Since Friday