We've had, to say the least, a very interesting week. The markets have gone to great length to prove how bipolar they are and just how volatile they can be. One 800 pound gorilla is the bailout plan that passed, didn't pass, was re-passed, and now on the table for the house to revisit tomorrow. This needs to be passed, if you want further dialog and dissection of this side of the issue:  http://www.scmortgagenetwork.com/cln_000001_mortgage_101.html

But now to the events of the day and the look ahead to tomorrow. Today's factor orders report fell by it's largest amount in 2 years while both consumers and manufacturers struggle to find financing in this locked up credit market where financing is much more difficult to obtain. Also, weekly jobless claims were estimated to come in at 475,000 but when the report came out at 8:30 this morning, it was 497,000 claims. This lifted bonds early and although they retreated from their highs, the 5.5% FNMA bond finished 28 bp higher $100.19. It wasn't a 'queit day' but compared to earlier in the week and in light of the calendar tomorrow, it didn't have the 'punch' that it may have normally had. The equity markets didn't fare to well with Dow tumbling 348 points to finish at 10,482 while the NASDAQ Composite Index fell 92 points to close at 1,976. The broader S&P 500 Index lost 46 points to end at 1,114. Looking forward to the reports due out tomorrow, we have some serious market movers due out, all at 8:30am tomorrow morning:

Report:                        Est.

Unemployment             6.1%

Average Work Week      33.7

Hourly Earnings            .3%

Non Farm Payrolls         -105k

Remember, anything worse than expected, and those are not good expectations to begin with, should kick the flow of investment from the stock market and into bonds. We're still, STILL, waiting on the significance of the Fannie and Freddie now basically being backed by the Federal government and therefore being as safe at the 10 year with higher yield. If that happens and we see the move that I'm expecting, then we should see a significant rate drop. That plus house passage of the bailout bill and therefore "acting as the drano" that they are desperately in need of, mortgage rates should see a substantial drop. I am looking for at least two reprices for the better tomorrow on top of a lower initial rate sheet in the morning.

This is a good week to get contracts signed but have the pre-approved first so you can have your clients lock in and get closed up on solid, low, long term mortgage rates. I will be certainly happy to help so please do not hesitate to call me if I can be of service.

Come back and check out the blog tomorrow, hopefully we'll have our silver lining.