US Stocks came out of the gate strong with the Dow up as much as 150 points early, but are now negative.   Mortgage Bonds have been positive, building steadily on yesterday's finish.  

Wall Street looked to be in a position to post solid gains at the opening, as better than expected earnings from Alcoa produced some much needed enthusiasm from investors.  Alcoa (the first of the Dow industrials to report quarterly earnings) is considered  a bellwether industrial stock for indicating economic health in the face of higher commodity prices, and a generally weak economy.  However, just as quickly as it began, the rally faded on news that Iran had test fired missiles capable of striking Israel.  Oil pricing has not jumped despite this news, and investors seem to be waiting for direction.  Overall, there is still much skepticism, and the focus is on upcoming earnings reports, especially from the battered Financial sector.  

Mortgage Bonds experienced one of those strange days yesterday, where both Stocks, and Bonds finished positive.  Today, Bonds are continuing their rally, even in the face of the concerning news from the Middle East.  There is tough resistance in the form of the 50, and 200 day moving averages very near overhead, and Bond prices have been rebuffed several  times today as they struggle to break through.  On a day where the only economic news is the release of Petroleum inventories, Bonds should continue to take their lead from Stocks, which are also searching for direction.   

We did get some improvement from yesterday in this morning's mortgage rates, and with formidable resistance to further gains, today is probably a good day to lock.  The Market is still very chaotic, and prone to turn quickly.  If the mood should swing over inflation concerns, there could be a significant drop (and corresponding rise to rates)  before we see any technical support for Bonds.

 Make it a great day!

Ron Brown

615 E Pioneer Ave.
Puyallup, WA 98372
(253) 520-0000