The mortgage market was staggered a bit by the Treasury Department's late morning announcement regarding the total size of next week's three-part borrowing spree.   Uncle Sam will be in the credit market looking to borrow a record setting $109 billion in the form of 2-, 3- and 7-year notes.  Next Tuesday investors will be asked to absorb $42 billion of 2-year notes -- followed by $39 billion of 5-year notes on Wednesday -- and $28 billion of 7-year notes on Thursday.  This massive amount of incoming supply has investors scrambling to make room in their portfolios - and it is that activity that is putting the lion's share of upward pressure on mortgage interest rates today.

In a separate report the National Association of Realtors said sales on existing homes rose 3.6% in June.  The NAR said it was the first time the industry had experienced three consecutive months of gain since early 2004 - raising hopes among some observers that a bottom in the battered housing sector may be at hand.  Other components of the report showed that inventory levels declined and even though prices fell, the declined was at a less steep pace.  I don't want to rain on anybody's parade - but I find it hard to image much of a sustained upward trend developing in the housing sector -- without a corresponding improvement in labor market conditions.  Until the job picture brightens significantly -- it is highly likely the large part of the recent improved sales pace for housing is more of a function of perspective borrowers' interest-rate driven sensitivities, strong seller concessions and selective bargain shopping rather than the dawn of a new "boomlet" in terms of consumer housing demand.   Judging by the very mild response today's stronger-than-expected existing home sales numbers drew from mortgage investors - a large number of traders see little reason to be overly concerned by the current news coming from the housing sector.

As expected, mortgage investors completely shrugged off this morning's 30,000 surge in the number of workers standing in line to file for first-time jobless benefits during the week ended July 17^th.   Market participants are aware that seasonal adjustments and major employment shifts in the auto sector have essentially rendered these weekly reports useless in terms of projecting the real underlying condition of the labor market.  These big seasonal adjustment factors should fade from the data within the next two or three weeks.

Today's conforming 30 year fixed rate is at 5.25%.