Market Analysis

Bonds improved slightly yesterday afternoon but are down this morning. The net effect on mortgage rates sheets is that the points/(rebate) for a given rate are essentially the same so far.  Fannie Mae and Freddie Mac mortgage-backed securities (MBS) are holding up better this morning in early morning trading than the US Treasuries which are under slightly more pressure in front of today's $38 billion 2-year note auction.  The stock market opened up but is currently slightly negative with the release of the July Consumer Confidence Index.  Selling in bonds is also abating in response to the Consumer Confidence numbers.

July's Conference Boards Consumer Confidence Index dropped to 50.4 vs expectations for a 51.0 number.  The 50.4 is the lowest number since February. Analysts had already been expecting a lower result for July as a result of the lack of good news on the jobs front. In other economic news, the Case-Shiller 20 city home price index for May showed a 1.3% increase compared to April and a 4.6% year-over-year increase compared to May 2009.  Analysts had been expecting a 4.0% increase on the year-over-year number.