The bond market is improving slightly this morning on weakness in the stock market which is responding to more negative news from the housing market.  While existing home sales actually declined less than expected, the inventory of unsold homes increased to the highest levels since Realtors began tracking single family homes and condos together in 1999.  It is important to note that trading is very light today in front of the Memorial Day weekend and today's activity should probably not be interpreted as a trend change.  In a prior blog entry I incorrectly stated that the US Treasury would be out of the debt markets for the balance of the 2nd quarter.  That information was in error.  The source I used for that had a missprint and I had not re-verifyied that information.  Next week the US Treasury will be in the debt markets borrowing $49 billion in 2 and 5 year notes on Wed and Thursday.  If the bond market is weak, this supply coming on the market will exacerbate the weakness.  In a weak market, to attract demand, bonds need to offer a higher rate/yield.  The hope for lower rates rests with a continued deterioration in the stock market.  The Personal Consumption Expenditure index (PCE) is the big economic report due next week.  It is not released until Friday.  This report is considered to be the Fed's favorite for measuring inflaton at the Consumer level.  Under current market conditions, we continue to recommend locking.  If the market does improve dramatically, we are able to renegotiate once and get within .375 points in closing costs of current market. For example, if the market improves to 5.625% with 0 points, we can renegotiate once to 5.625% with .375 points. Most of our borrowers who renegotiate are pleasantly surprised, as we tend to renegotiate at times when there is another brief window to get better than market rates. If you would like to be ready to lock with us, the first step is to be pre-approved. You can access a short application form at  http://www.ironharbor.com/xSites/Mortgage/IronHarbor/Content/UploadedFiles/Iron%20Harbor%20Short%20Application.pdf .