Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Very early today the 10 yr note was better with the yield down to 2.47% down 1 bp frm yesterday; it didn’t last however, at 8:30 the 10 yr yield increased to 2.50% with US stock indexes working lower early after the strong improvements over the last few days. Mortgage prices at 9:00 -20 bps frm yesterday’s close. At 9:30 the DJIA opened -72, NASDAQ -11, S&P -6. 10 yr at 2.54% +6 bp and 30 yr MBSs -50 basis points. No real let up in underlying volatility, and it will continue through next week at least. Over the last couple of days, and after the shock to markets frm Bernanke’s comments last week, Fed officials are out to cool off the fears. Three Fed officials yesterday making comments that the Fed was still uncertain about what will happened with the QEs. Bernanke last week said the Fed would begin to taper by the end of the year pending how the economy performs. The Fed’s outlook for the economy is optimistic, that the economy is recovering and the Fed will begin backing away. Since that remark the markets convulsed into panic; interest rates increased, the stock market fell---both on significant moves. Then it was the Fed’s turn to be shocked, Bernanke’s remarks were not expected to crash markets and set of the volatility. Now the Fed is out attempting to calm markets with less hawkish comments from the likes of NY Fed Pres. Dudley yesterday and other Fed officials out making speeches. There has been some relaxation in the bond market, the 10 yr note yield has declined from 2.65% to 2.50% early this morning but the bearish bias remains intact. Unless the US and global economies reverse and weaken the bond and mortgage markets are not likely to improve much. It is all about how the economy performs in the coming months; Bernanke made it clear in his remarks last week that the Fed’s actions moving forward is dependent on data measuring the economy’s performance. Initially no ne chose to focus on that aspect, setting off the hysteric moves last week. Now some balance being worked into the equation, but not much and the market volatility will continue with wide swings. Don’t allow yourself to believe rates will fall much; the trend is for higher interest rates, or at best trade at present levels. Bottom line: the Fed believes the economy is improving, the track record at the Fed on economic forecasting isn’t stellar by any means and markets know it. Taking the interest rate forecasts to its lowest denominator in terms of outlook---it all depends on the economy. Our view, the economy isn’t as strong as the Fed thinks, if we are correct interest rates should stabilize at present levels. That said, it isn’t our view or the Fed’s outlook that is important it is what markets think. Two data points this morning; at 9:45 the June Chicago purchasing managers index, expected at 55.0 frm 58.7 in May, the index declined to 51.6. The decline is counter to the increases seen in other regional indexes as most have been better but Chicago isn’t Richmond, there are many more manufacturing operations in the Chicago region. The reaction sent stock indexes down more but didn’t do lot for the bond and mortgage markets. At 9:55 the final June U. of Michigan consumer index was expected at 83.0 frm 82.7 at mid-month, the index increased to 84.1. The final reading for the May index was 84.5 so on a month to month view the index declined. The report sent stock indexes down more, but didn’t improve the bod and mortgage markets.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Treasuries and mortgages traded better this morning prior to 8:30 economic data. The 10 yr note at 2.49% -5 bp, 30 yr MBS prices +24 bp frm yesterday’s closes. Weekly jobless claims were expected -9K, as reported down 9K to 355K; the 4 week average declined about 2800 frm last week. May personal income expected up 0.2% increased 0.5%, personal spending expected +0.4% was up 0.3%; April spending originally reported -0.2% was revised to -0.3%. The personal consumption expenditures and inflation gauge increased 0.1%, yr/yr +1.1%. Adjusting consumer spending for inflation, which renders the figures used to calculate gross domestic product, purchases rose 0.2% in May after a 0.1% decrease in the previous month, The two reports generally in line with estimates didn’t generate any immediate changes in the stock indexes or the bond and mortgage markets. At 9:00 this morning the 10 yr at 2.50% -5 bp, 30 yr MBS prices +30 bps. At 9:30 the DJIA opened +87, NASDAQ +20, S&P +10; 10 yr 2.49% -6 bp and 30 yr MBS price +35 bps frm yesterday’s close. At 10:00, a few minutes ago, NAR reported May pending home sales, expected +1.0% sales were up a huge 6.7%. Pending home sales are contracts signed but not yet closed. Not much reaction to the better report so far. After last week’s wild selling the bond market is settling down at slightly lower rates but the overall bias remains bearish for the bond and mortgage markets. Bernanke’s press conference last week shocked financial markets here and around the world. No one expected he would be as definitive as he was; saying the Fed was ready to begin tapering its QEs as early as the end of this year and would likely be completely done with it by mid-2014. Markets were expecting the Fed’s next move would be to begin backing off of its $85B of monthly purchases of treasuries and mortgage securities but the time frame wasn’t expected to be that soon. Bernanke said the outlook for the economy was improving and as long as the future data confirmed that the easing’s would end. The initial reaction to his comments sent interest rates higher and dropped the stock market in excessive movements. Since then the DJIA has recovered, after falling 800 points the index has increased 200 points since Tuesday and so far this morning up another 130 points. The 10 yr note rate, driver for all long term interest rates, increased from 2.30% prior to Bernanke’s comments to 2.65% and 30 yr MBS rates increased 25 bps in a matter of a few sessions. Some retracements in markets was likely and is being motivated by comments frm other Fed officials and central banks from the ECB to the Bank of China in efforts to calm markets. We warned market volatility would increase and will likely be touchy now until the June employment report scheduled for July 5th. Most volatility will be in the bond and mortgage markets; with rates historically low it isn’t realistic to expect interest rates will decline to the lows seen just a month ago. The question now is, how much of an improvement can be expected? A couple of Fed officials out today; at 10:00 NY Fed Pres. Dudley. At 10:30 Fed Governor Powell talks. Dudley saying the market’s interpretation of the Fed’s intentions are not accurate; another voice trying to temper the recent shock of increased rates. He wasn’t talking about the increase in the 10 yr note, but more about short term rates which as far as we are concerned weren’t the issue. The Fed will keep the FF rate at 0.0% to 0.25% until the unemployment rate falls to 6.5% and that appears to be a long way off. He said as long as the Fed continues to buy the 10 yr note should not be any higher than 2.50%. The markets are “quite out of sync” with the Fed’s policy. Bill Gross of PIMCO fame out this morning saying the 10 yr note should be down to 2.20% (2.49% now). Gross, a man of respect has been wrong recently about the bond and interest rate markets. A month ago Gross saying that PIMCO was divesting of some of its fixed income treasuries, then a couple of weeks ago he turned buyer just before the spike higher; now talking up his confused position that rates should be 30 basis points lower on the 10 yr. We talk a lot about uncertainty that presently dominates the markets; Gross typifies what we mean by uncertainty and volatility that is the present state in the interest rate markets. The bond and mortgage markets, based on all momentum oscillators became oversold and now undergoing a retracement. Rate markets remain bearish in the wider perspective; in the near term there is excessive intraday volatility that implies that uncertainty is dominant in the markets. The last few days the movements through the day have been huge; MBSs opening better then selling back and finally at the end of the day ending close to unchanged from the previous day. Re-pricing frm lenders has become a daily occurrence both up and down. Volatility like this is indicative of uncertainty about where rates should be under the present ever-changing outlooks.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com As noted here, we have talked about volatility that would dominate markets the next couple of weeks. today a good example; yesterday MBS prices fell 33 bp on the day, this morning the 30 yr 3.5 FNMA coupon at 8:30 +73 bps. All about data points and markets were surprised (again) when at 8:30 the final read for Q1 GDP reflected the economy was not nearly as strong in Q1 as was widely believed. The overwhelming expectation was Q1 would be +2.4% unchanged from the preliminary report last month; as reported the economy grew at just 1.8%. The reaction sent 10 yr note yield down to 2.52% frm 2.60% yesterday, and spiked MBS prices higher. The weaker growth in Q1 has turned speculation that the Fed would begin tapering in Sept into turmoil. As we noted, it is all data dependent on how and when the Fed would begin to end its market support; Bernanke made that plain when the surprised the markets with his comments that he was ready to begin the end of Fed market support. That part of his remarks was swept under the rug by markets that focused only on his remarks that the Fed would rapidly wind down its support and be completely out by mid-2014. The softer than expected Q1 growth will change some of those outlooks that have driven interest rates higher recently. Most of what we had been hearing from analysts and economists were forecasting a slowdown in Q2 that ends Friday, and that corporate earnings would be down from Q1. If those forecasts hold the take away has to be that the Fed isn’t likely to taper as soon as what had been expected until this morning. It is still a bearish bond and mortgage market however the selling binge will likely lessen somewhat. The weakness in Q1 was due to less consumer spending that accounts for about 70% of GDP growth. Household purchases were revised to a 2.6% advance compared with the 3.4% gain estimated last month. Households cut back on travel, legal services and personal care expenditures and also curbed spending on health care as the two percentage-point increase in the payroll tax caused incomes to drop by the most in more than four years. Disposable income adjusted for inflation fell at an 8.6% annualized rate, the biggest drop since the third quarter of 2008. The immediate reaction from the bullish camp was that the second half of the years would see consumer spending increase---hope is what markets are living on these days. Mortgage applications decreased 3.0% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 21, 2013, the lowest level since November 2011. The Refinance Index decreased 5.0% from the previous week to the lowest level since November 2011. The seasonally adjusted Purchase Index increased 2.0% from one week earlier, and was 16% higher than the same week one year ago. The refinance share of mortgage activity decreased to 67% of total applications, the lowest level since July 2011, from 69% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7% of total applications. The government share of purchase applications dropped to 28%, the lowest level in the history of this series. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 4.46%, the highest rate since August 2011, from 4.17%, with points decreasing to 0.35 from 0.41 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 4.52%, the highest rate since March 2012, from 4.23%, with points decreasing to 0.28 from 0.34 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.20%, the highest rate since August 2011, from 3.85%, with points increasing to 0.40 from 0.22 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.55%, the highest rate since November 2011, from 3.30%, with points increasing to 0.43 from 0.39 (including the origination fee) for 80% loans. The average contract interest rate for 5/1 ARMs increased to 3.06%, the highest rate since October 2011, from 2.81%, with points increasing to 0.39 from 0.35 (including the origination fee) for 80% loans. At 9:30 the DJIA opened +89, NASDAQ +28, S&P +9; 10 yr note at 2.52% -8 bp and 30 yr MBS price +82 bps. At 1:00 this afternoon Treasury auction $35B of 5 yr notes; yesterday’s 2 yr auction was not well bid. In Europe the stock markets rallied that added to it when Q1 US GDP hit on relaxed concerns of an early exit by the Fed. A German consumer confidence gauge for July rose to 6.8 from 6.5 in June, Nuremberg-based research company GfK AG said today. That would be the highest since September 2007. Analysts had expected a reading of 6.5. The German 10 yr bund yield fell seven basis points to 1.74% frm 1.85 two days ago. Euro-area bonds rose, led by those of peripheral nations including Italy and Spain as European Central Bank President Mario Draghi said monetary policy will stay accommodative, boosting the appeal of fixed-income assets. Today’s fall in US interest rates is a welcome move; that said the technicals remain bearish. The 10 yr and MBSs could rally a lot more and still not change the bearish outlook. The 10 yr would have to fall to under 2.35% the 3.5 July FNMA coupon price would have to exceed 102.50---presently 100.64. Today’s weak Q1 GDP report is adding support to the bond and mortgage markets that maybe the Fed will not be moving as quickly as had been thought to unwind its easing. That said, although Q1 was softer, it is to an extent history. The future remains unsure however recent Q2 data has been strong; yesterday May durables were better than expected so too May consumer confidence index and May new home sales. Us this and any rallies to button up deals; interest rates are not likely to fall much frm current levels.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com A nice price reversal yesterday, after being down 107 bps at 9:30 the 3.5 July FNMA ended down just 14 bps; the 10 yr note unchanged at the end of the day at 2.54%. This morning prior to 8:30 the 10 yr yield had fallen to 2.49% (5:00 am); 8:30 brought May durable goods orders better than forecasts. Orders were expected up 3.3% as reported up 3.5%, ex transportation orders were expected down 0.1% but increased 0.7%. Treasures and MBSs lost most of the early gains. At 9:00 April Case/Shiller 20 city home price index was expected up 10.9% frm this time last year, as reported the prices increased 12.1%; month to month prices increased 1.7% with estimates at 1.5%. The April FHFA housing price index was expected at +1.2% but was up 0.7%. Two reports on home prices diverged somewhat but there was not much reaction to either data. At 9:30 the DJIA opened +71, NASDAQ +30, S&P +9. 10 yr at 9:30 2.54% unch and 3.5 30 yr Fannies +27 bps. Three important data points at 10:00. May new home sales were expected +1.3% increased 2.1% to 476K the best level since June 2008, April new home sales were revised to 466K frm 454K; the median sales price increased 10.3% yr/yr to $263,900.00. The supply of homes increased to 4.1 months frm 4.0% in April. June consumer confidence was expected at 75.0 frm 76.2 in May, the index jumped to 81.4 the best level since Jan 2008. The regional Richmond Fed manufacturing index increased to 8.0 the best since last Nov. The three reports sent interest rates higher and prices lower for mortgage-backed securities. This afternoon Treasury will kick off this week’s auctions with $35B of 2 yr notes; recent 2 yr auctions have not been as strong in bidding as the average of the last 12 2 yr auctions. Tomorrow $35 of 5 yr notes and Thursday $29B of 7 yr notes. Today’s data may confirm that the Fed’s outlook on the economy may be correct after all and it adds more to the belief that the Fed will begin to reduce its monthly buying o mortgages and treasuries by the end of the year. The 10 yr note rate prior to the 10:00 data was abut unchanged at 2.55%, at 10:10 the rate increased to 2.58%; 30 yr MBSs prior to 10:00 +20 bp, at 10:10 -10 bps. No other way to look at the bond market, it is seeing continued selling and technically quite bearish on all our models.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Not a good start to the week with interest rates continuing to increase; at 9:00 the 3.5 July FNMA coupon -111 basis points from Friday’s 100 basis point fall. The 10 yr note at 2.61% at 9:00 a little better from earlier when the yield hit 2.64%. The rate is now as high as in 2011 before the Fed’s QE took hold. The stock market in the futures markets at 9:00 reflecting a decline of 136 points on the DJIA. There are no economic reports today but this week is heavy on key data points and Treasury auctions totaling $99B. Markets this morning reacting to concerns in China as well as Bernanke’s statement last week. China’s central bank said there’s a reasonable amount of liquidity in the financial system and urged banks to control risks from credit expansion, signaling no relief from a cash squeeze. Chinese equities entering a bear market on concern a cash crunch will hurt the economy. Bonds dropped around the world on mounting speculation the U.S. will begin curbing stimulus, while commodities declined and the dollar strengthened. US and global markets in pure panic these days; markets were completely unprepared for the rapid increase in interest rates and China’s economy falling. Given the present swift fall in US and global equity markets and the speed in which interest rates have increased is clearly evidence that between Bernanke’s comments last week and the credit crunch in China markets were caught by surprise; since last week it has been mostly reaction rather than action predicated on changing fundamentals. The US 10 yr note rate since May 3rd has increased 61% on its yield and 30 yr mortgages up about 45%. A report this morning frm a survey conducted by Bloomberg is a telltale sign that economists are confused and over the top in our view; saying the Fed will cut its purchases of treasuries and MBSs by $20B a month in September. We believe that is too radical and still depends on the data between now and then. While the economy is slowly improving we have yet to see the data that supports such a forecast. The Fed’s withdraw frm the stimulus is unlikely to be that swift and that deep in the time frame of Sept. Nevertheless, it appears based on the way markets are presently reacting that the fear is mounting. At 9:30 the DJIA opened -131, NASDAQ -36, S&P-17. The 10 yr at 2.64% and 30 yr MBS prices down 107 bp and FHA price down 135 bps. All global interest rate markets are climbing right along with US treasuries as the end approaches for central banks’ support of economies around the world. Once that sunk n last week it has been a stampeded out of fixed income investments and stocks momentarily. We have had some questions recently about where the money is going; out of fixed income and moving away from equities these days. Money doesn’t have to be invested all the time; likely a lot of it is sitting in accounts with no risk until more orderly markets can be sustained. How much more increase is in the cards? Not an easy answer now with current market volatility. Economic data is always critical to markets, the next two weeks the data takes on even more importance with the Fed considering ending the QEs. Whether the Fed does move rapidly, or at a less aggressive pace that is now fueling the markets, depends on incoming data and the June employment report in two weeks. This week the data calendar has numerous reports on the housing sector, the strongest segment of the economy. In the meantime we expect volatility will remain high. Use any improvements to get deals consummated.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com After a 550 point decline in the DJIA in the last two days, this morning the index is opening slightly better. Global stock markets mixed today, some better some worse but overall not much change in any global equity markets after the Bernanke shock on Wednesday. The world is facing the possible end of central banks driving markets and having now to adjust to the real underlying fundamentals. After years of Fed money printing and low interest rates the new question, one that has been pushed under the rug for four years, what is the real status of the US and global economies? Taking away the blanket of comfort is always a chilling; now markets and economists have to actually look at the economic outlook from the perspective of reduced stimulus. What exactly is the consumer capable and willing to do with spending, what will small business do about employment as interest rates increase, what is the real fair value of stock prices when the stimulus is subtracted? Lots of questions with no significant answers at the moment. At 9:30 the DJIA opened +78, NASDAQ +8, S&P +7; 10 yr at 2.44% +3 bp and 30 yr MBS price +13 bp frm yesterday’s massacre. Wednesday Bernanke shocked the financial world when he surprisingly defined what and when the Fed would do; up to that point it was all speculation frm Fed watchers and even within the Fed itself. Now the gauntlet has been laid; at least it has been outlined. Don’t overlook that Bernanke also said that the actual actions by the Fed to begin unwinding the stimulus was dependent on the economy, presently the Fed believes the economy is on the road to recovery although slowly. That Fed view led to Bernanke’s decision to begin the tapering. The Fed’s track record on economic forecasting isn’t any better than private forecasts just because it is the Fed, so while the momentary outlook for interest rates has become more bearish it isn’t cast in stone unless the Fed’s economic outlook is proven correct. So, where are we now? For all the talk and forecasts, and the Fed’s actual future actions, it depends on how healthy the economy really is when seen without the central bank supporting investments and low interest rates. Recent economic data overall has been slightly better based only on estimates and forecasts, but we ask this; is employment increasing with new jobs that pay wages at levels that will improve 80% of wage earners? Will businesses continue to report solid earnings and profits as they have in recent quarters? When ObamaCare kicks in in 2014 what impact will it have on individuals and business ( costs will increase)? Presently markets are not thinking about any of it, all market action in the last two weeks has been driven by reducing leverage and making decisions on the fly. Let’s give this a couple of months; we still hold that the economy isn’t as fundamentally strong as what most, including the Fed, believe it is. All said though the present situation based on performance in the markets remains very bearish for interest rates and for equity markets. Our worn moniker, don’t fight the tape is still the best advice and the only way mortgage lender and originators can look at it. Opinions about the future, even two months from now I terms of conviction are as thin as shaved ham at the deli. The 10 yr note is toying with longer term support at the 2.40% levels but presently appears to be failing.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Not a good start this morning, after the serious selling yesterday in the bond and stock markets this morning the 10 yr note climbed to 2.43%, up another eight basis points frm yesterday’s increase of 17 bps. Yesterday 30 yr the 3.5 July FNMA coupon price fell 121 bp and GNMA 3.5 fell 177 basis points; the DJIA dropped 206 points. At 9:00 this morning the 10 yr traded at 2.42%, 30 yr MBS price down 57 basis points frm yesterday’s close, the DJIA futures point to an opening down 100 points. Gold crashing, down about $80.00, all global stock markets taking heavy hits. My mother used to say, ‘be careful of what you want, you may get it’; going into the FOMC meeting yesterday and then Bernanke’s press conference markets were clamoring for more clarity from the Fed. For the past six weeks the one constant drum beat within the markets focused on what will the Fed do? Markets wanted clarity. Be careful of what you want, it may not be what you expected; yesterday markets got clarity like a pie in the face and what it markets got wasn’t what was expected….clarity frm Bernanke. Bernanke in his press conference for the first time put details out there about what the Fed will do and when it will do it. Bernanke told the world that the Fed believes the economic outlook is improving and based on the Fed’s forecasts of continued slow improvement (if it continues) the Fed will begin tapering its easing by the end of this year and by mid-2014 all the easing’s will be ended. Shock an Awe panicked markets, interest rates exploded and the US and world stock markets fell like stones. Up until yesterday Fed officials were want to be specific, even Bernanke in his Congressional testimonies recently was reluctant to put specifics out there. Based on the reactions in all markets yesterday so far this morning, markets were not expecting specifics, just more obtuse rhetoric that the Fed is famous for. One thing to keep in mind, Bernanke cautioned that the Fed’s tapering and ending its market support is based on what the Fed believes now, that the economy will continue to improve. If the Fed is wrong, and their track record isn’t much better than all the private estimates, Bernanke made it clear the Fed will keep on with its purchasing of MBSs and treasuries. Economic data, always significant, will have added importance now given the definitive comments frm him yesterday. One thing that is important, Bernanke said the Fed would not sell its MBS securities it holds, a relief because there were increasing concerns the Fed would sell MBSs eventually and add ore increase to mortgage rates. At 8:30 this morning weekly jobless claims were expected to be up 6, as reported claims increased 18K to 354K. The four-week moving average, a less-volatile measure than the weekly figures, climbed to 348,250 last week from 345,750. At 9:30 the DJIA opened -100, NASDAQ -36, S&P -15; the 10 yr at 2.41% +6 bp and 30 yr MBS price -57 bps in price from yesterday’s close. (see below for 10:00 levels). Three key reports at 10:00. May existing home sales expected up 0.5%; sales increased 4.0%, the median sales price $208K, yr/yr sales up 12.9%, the median price up 15.4% yr/yr. The number of days to sell a home down to 39 days compared to 72 days a year ago. May leading economic indicators reported up 0.1% against estimates of +0.2%. The June Philly Fed business index really improved, expected at +1.0 frm -5.2 on the index in May the index increased to 12.5 the best index reading since April 2011; all the interior components were also much stronger than was expected. Even the better data at 10:00 didn’t generate much positive response initially. China appears to be tightening credit by draining reserves to stop predatory lending in the country. China’s seven-day repurchase rate, which measures interbank funding availability, rose 270 basis points, or 2.7 percentage points, to 10.77%. The one-day rate rose by an unprecedented 527 basis points to an all-time high of 12.85%. Also China’s manufacturing is shrinking at a faster pace this month; a preliminary reading of 48.3 for the Chinese Purchasing Managers’ Index (EC11FLAS) released today by HSBC Holdings Plc and Markit Economics compares with the 49.1 median estimate. The importance of China’s economy is another reason US stocks are under pressure. The same story; the bond and mortgage markets remain technically bearish as we have noted since the beginning of May. Take all the debate and outlooks frm pundits, analysts, and economists, wad them into a huge ball and toss them in the basket. All you need to focus on is what the markets themselves are doing and right now markets are in turmoil and declining. Doing that will always keep you in line with the markets regardless of what is written or said even by the Federal Reserve. Our forecasts were that the 10 yr would find some support at 2.40%, this morning the note hit 2.47%, it is still in play at 2.40% on a closing basis. That said, estimates as to how high before a rebound are not as reliable as we would like in our analysis. Look for more volatility through the rest of the day. The bond and mortgage markets, as well as the stock market still reacting to the Fed surprise yesterday, a lot of emotional tension today.