Market Analysis

Yesterday was a bad day for bonds as the government's 30 year bond auction required yields even higher than was anticipated to generate sufficient demand.  This caused our rates to increase approx .125%.

In economic news this morning, the April non farm payroll losses were only 539,000 instead of the 610,000 that had been expected.  However, after taking into consideration that the government hired 72,000 workers for the 2010 Census, the 539,000 job loss was actually pretty much on target.  As such, the bond market has not experienced further selling pressure this morning.

Luckily the Federal Reserve still has approx $750 billion allocated to purchasing mortgage backed securities issues by Fannie Mae and Freddie Mac.  The's Fed's buying activities are expected to help contain what otherwise could be a quick run up back to the 6% level.  It is important to note though that expectations are that rates will rise before the Fed mortgage purchase activity ends, just in anticipation of it ending.  As such unless something unexpected occurs, rates should begin to increase sometime this summer to more normal historic levels.