Morning Report - What to watch for with the FOMC this afternoon

Vital Statistics:

	Last	Change	Percent
S&P Futures	1933.6	-0.2	-0.01%
Eurostoxx Index	3280.8	5.5	0.17%
Oil (WTI)	106.6	0.2	0.21%
LIBOR	0.231	0.000	0.00%
US Dollar Index (DXY)	80.54	-0.094	-0.12%
10 Year Govt Bond Yield	2.63%	-0.02%
Current Coupon Ginnie Mae TBA	105.9	0.1
Current Coupon Fannie Mae TBA	105.2	0.1
BankRate 30 Year Fixed Rate Mortgage	4.26

Markets are flat ahead of the FOMC meeting. Bonds and MBS are up.

Mortgage Applications fell 9% last week as rates ticked up a hair. Purchases fell 4.7% while refis fell 12.7%. Refis dropped to 51.7% of all loans. 

The FOMC decision is expected around 2:00 pm EST. Expect to see another reduction in asset purchases and no change in the Fed Funds rate. The focus will undoubtedly be Janet Yellen's dot graph which shows the range of Fed Funds rate projections by the different FOMC members. Remember after the March FOMC meeting the bond market sold off on Janet Yellen's "as soon as six months" comment, which was referring to the one lone dot sitting at the 1% line in 2014. Current forecasts for 2014 GDP are 2.8% - 3%, unemployment 6.1% to 6.3%, and inflation 1.5% to 1.6%. The Fed has consistently been overshooting on their GDP and unemployment estimates, while their projections of inflation have been more or less on target. So the big things to watch for are a) Janet's dot graph, and b) revisions to economic forecasts.

Julian Castro, Obama's nomination to head HUD believes that credit standards can be eased for FHA loans without jeopardizing FHA's solvency. HUD is keen to increase access to credit, not only for minorities but also for the first time homebuyer, who has been the missing piece of the puzzle in the housing recovery.