Morning Report - the week ahead

Vital Statistics:

	Last	Change	Percent
S&P Futures	1660.1	-2.9	-0.17%
Eurostoxx Index	2806.9	-11.1	-0.39%
Oil (WTI)	95.7	-0.3	-0.33%
LIBOR	0.273	-0.001	-0.18%
US Dollar Index (DXY)	84.01	-0.240	-0.28%
10 Year Govt Bond Yield	1.92%	-0.03%
Current Coupon Ginnie Mae TBA	104.2	0.2
Current Coupon Fannie Mae TBA	102.7	0.2
RPX Composite Real Estate Index	198.2	0.3
BankRate 30 Year Fixed Rate Mortgage	3.66

Markets are slightly weaker to start the week on no real news. The Chicago Fed National Activity Index came in at -.53, indicating that manufacturing activity is decelerating. We saw the same thing in the Philly Fed last week. Merger Monday is back with a few new deals. Bonds and MBS are up small

This week is very data-light. The main market-moving event will be the release of the FOMC minutes from the April 30 meeting. The focus will be on the tapering of quantitative easing. We will also get existing home sales  - it will be interesting to see if the lack of inventory is concentrated only in the hot markets like Phoenix and San Francisco, or is it more widespread. New Home sales come out on Thursday - given the good earnings we have seen from the homebuilders, this number should be good. Finally, on Friday we get durable goods. Expect activity to start to tail off after the FOMC minutes. By noon on Friday, most of the street will be on the LIE ahead of the long weekend, so spreads will widen and pricing will be lousy.

Wells has briefly suspended foreclosures after new questions from the OCC. Meanwhile, the payments from the settlements has been slow to arrive.

The bond market bloodbath bumped up borrowing rates quite quickly. After bottoming out at 3.4% in early May, the average 30 year fixed rate mortgage is 3.66%. That is a big move in a short period of time. In times of excessive volatility, it makes more sense to lock than float. LOs tell your customers they are basically speculating on interest rates if they choose to float.